- Russia’s oil revenues in October 2024 declined by 29% compared to the same period in 2023 due to lower global oil prices and domestic subsidies.
- The lower oil prices and subsidies negatively impacted Russia’s budget, which heavily relies on oil and gas revenues.
- Russia is aiming to reduce its dependence on oil and gas revenues to mitigate the impact of volatile energy prices on its economy.
Lower oil prices and subsidies for domestic refiners resulted in a 29% annual plunge in Russia’s oil revenues in October, Bloomberg’s estimates based on official government data showed on Tuesday.
In October, international oil prices and the price of Russia’s flagship crude, Urals, slumped compared to the same month of 2023. This eroded Russian revenues as the price of the Urals grade averaged $63.57 a barrel, compared to $83.18 a barrel in October last year.
The revenues from oil for the state were also impacted by the government subsidy paid to local refiners. Crude processing companies received in October the so-called damper payments, a form of subsidy to producers to encourage them to sell their refined petroleum products in Russia instead of exporting these for a higher price. Last year in October, Russia didn’t pay such incentives to its refiners.
So, per Bloomberg’s calculations, the Russian budget received last month a total of $10.8 billion (1.05 trillion Russian rubles) from oil, down by 29% from a year earlier.
Total budget proceeds from oil and natural gas combined also declined, by about 25% to $12.4 billion (1.21 trillion rubles).
Month-on-month, Russian revenues jumped in October by over 75%, but this was due to the key quarterly oil tax, which is a profit-based tax in Russia, being paid by companies four times a year, in March, April, July, and October.
Proceeds from oil and gas sales are the most important cash stream for Russia’s federal budget.
Russia has been signaling it would be seeking to reduce its dependence on oil to minimize the impact of volatile oil and gas prices on its budget revenues.
A few years ago, oil and gas revenues made up 35-40% of Russia’s budget revenues, Russian Finance Minister Anton Siluanov said last month, adding that this share is set to drop to 27% next year and to 23% in 2027.
By Tsvetana Paraskova for Oilprice.com
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