Russian energy revenue plummeted 24% in 2023 as oil prices and gas exports fell

Russia’s tax revenue from its energy sector dropped 24% in 2023 as oil prices and Moscow’s natural gas exports fell.

The Kremlin generated 8.82 trillion rubles ( $99.3 billion) last year, according to Bloomberg, citing new data from the Russian Finance Ministry.

That came as Russia’s benchmark Ural crude blend averaged $62.99 per barrel, down 17% for the year, though it’s above the G7’s $60 price cap imposed after Russia’s invasion of Ukraine.

Still, the US Treasury Department has grown more aggressive in enforcing sanctions, and the Urals price discount versus benchmark Brent crude has widened, reaching $14 per barrel in December.

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Meanwhile, Russia largely cut off pipeline gas exports to Europe in response to earlier sanctions. This decision sent Russia’s gas export revenue down more than 65% in 2023.

To replace its traditional trade partnership with Europe, Russia has rerouted energy exports towards alternative markets, such as China and India. However, outflows headed to these countries came with a discount, providing Moscow with less revenue upside.

The strain on the Kremlin’s finances was also worsened by its use of stimulus, paying out $32.6 billion worth of subsidies to its oil industry. Though policymakers attempted to pull back some of this spending, doing so resulted in a late 2023 fuel shortage throughout the country.

Spending pressures look to be mounting in 2024, with nearly a third of Russia’s budget allocated for defense. Social spending will account for one-fifth of the budget, especially as President Vladimir Putin gears up for his fifth election run.

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In December, a US official said that sanctions on Russia’s oil and gas industries will remain in place for years to come, with the goal of halving energy revenues by 2030.

Source: Markets Insider