Russian Oil and Gas Revenue Soars 41% in First Half of 2024, Data Shows.
Russia’s federal budget saw a significant boost from oil and gas sales in the first half of 2024, with revenues rising by approximately 41% year-on-year to 5.698 trillion roubles ($65.12 billion), according to finance ministry data released on Wednesday. The increase is attributed to higher oil prices and a weaker rouble.
Oil and gas revenues have been a crucial source of income for the Kremlin, contributing around one-third to half of the federal budget over the past decade. Despite Western sanctions aimed at reducing Russia’s oil and gas income due to the military conflict in Ukraine, the sector remains a financial backbone for the country.
During the first half of the year, the price of Russia’s flagship oil blend, Urals, averaged $69.1 per barrel, surpassing the Western-imposed price cap of $60 and up from $52.5 in the same period in 2023. Concurrently, the rouble weakened to 90.8 per dollar, down from 76.9 in January-June 2023.
Revenue from oil and gas in May was 794 billion roubles, slightly below Reuters’ forecast of 814 billion roubles. However, proceeds from the mineral extraction tax (MET) surged in June to over 1 trillion roubles from 631.6 billion roubles in June 2023.
The data also indicated a reduction in payments to refineries under the “damping mechanism,” designed to prevent companies from exploiting high fuel export prices and protect the domestic market. Payments decreased to 158.1 billion roubles last month, down from 201.7 billion roubles in May and 78.6 billion roubles in June 2023.
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Russian President Vladimir Putin has lauded the country’s economic growth rates, claiming they surpass those of Western economies. The economy grew by 3.6% in 2023, following a revised 1.2% contraction in 2022. However, Russian economists have critiqued the quality of this growth, noting that increased production of military equipment may inflate GDP figures but offers limited benefits to the general population.
For the entire year of 2024, the government has budgeted for federal revenue of 10.7 trillion roubles from oil and gas sales, a 21% increase from 2023. Last year, lower oil prices and reduced gas exports led to a 24% decline in revenue.
Since the launch of what Russia terms a “special military operation” in Ukraine in February 2022, the country has significantly increased defense and security spending. This has resulted in two consecutive annual deficits exceeding 3 trillion roubles, roughly 2% of GDP.
