Russia's Oil and Gas Revenue Surge: A 50% Year-on-Year Increase in July

Russia's oil and gas revenue surged by 50% in July to nearly $14 billion, driven by higher oil prices and a weaker rouble. This marks a significant rise from 747 billion roubles in June to 1.22 trillion roubles in July. For 2024, Russia has budgeted federal revenue of 10.7 trillion roubles from oil and gas sales.

Russia's oil and gas revenue for July is projected to increase by 50% year-on-year to almost $14 billion, buoyed by stronger oil prices and a weaker rouble, according to Reuters calculations released on Thursday. This revenue has consistently been a crucial financial pillar for the Kremlin, contributing significantly to the federal budget.

Preliminary estimates indicate that July's oil and gas revenue will reach 1.22 trillion roubles ($13.93 billion), a sharp rise from 747 billion roubles in June and 811 billion roubles in July 2023. The overall revenue for the January to July period is expected to climb by 65% year-on-year, totaling 6.9 trillion roubles.

July's data, scheduled for publication by the Finance Ministry on August 5, will reflect the benefits of Russia's profit-based tax, generally paid quarterly, potentially bringing in around 500 billion roubles. The increase in the average price of Urals oil grade and reductions in budget payments, such as subsidies to refineries, have also contributed to the revenue rise.

The 2024 federal budget targets 10.7 trillion roubles from oil and gas sales, a 21% increase from 2023, despite initial plans of 11.5 trillion roubles. Weaker oil prices and reduced gas exports had previously led to a 24% drop in revenue in 2023.

Since the start of its special military operation in Ukraine, Russia has escalated defence and security expenditures, resulting in two successive annual deficits exceeding 3 trillion roubles, roughly 2% of GDP.

(With inputs from agencies.)