Lower crude oil prices, Western sanctions and European push for energy independence combined to shave 36% off Russia’s oil and gas tax collection for last month, compared to a year ago, Bloomberg reports, citing the Russian Finance Ministry.
Crude oil and oil products, which accounted for some 75% of Moscow’s total hydrocarbon revenues in May, saw a 31% drop in budget proceeds for Moscow compared to a year ago based on calculations made by Bloomberg using Finance Ministry data. Bloomberg notes that Russian Urals crude was selling for an average of $53.34 per barrel in May.
Natural gas tax revenues also shed 46% last month, compared to a year ago, while tax income from the collection of tariffs on natural gas exports shed 81%.
In April, Reuters reported that Russia’s budget revenues from oil and gas had fallen by 64% year-on-year, and by 5.9% month-on-month due higher subsidies to oil refineries.
According to the U.S. Treasury Department, in the wake of the implementation of the G7’s price cap policy on Russian crude, Moscow’s oil revenues fell “substantially” compared to pre-war levels.
From January to March this year, the Treasury Department said the Russian federal government’s oil revenues had dropped over 40%, falling to 23% of the budget–down from 30-35% of the budget prior to launching the war on Ukraine.
“Russian exports have continued to flow, contributing to global oil market stability. Even as global oil prices have remained stable, the price of Russian oil has fallen significantly—driving down the Kremlin’s revenue,” the Treasury Department said in a statement.
“Immediately after the invasion, Russia received windfall profits on an oil price spike created by its war in Ukraine. But today, the price cap policy is taking that windfall off the table, which allows for low- and middle- income countries to purchase oil while at the same time making it increasingly challenging for Russia to finance its aggression,” the statement continued.
Reuters noted on Monday that Moscow has recorded a budget deficit of around $42 billion in the first four months of this year amid soaring spending on the war in Ukraine, combined with falling energy revenues for war-time coffers.
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