The price of Russia’s crude has tumbled over the past three months to its lowest level since Russia invaded Ukraine in early 2022, weighed down by intensified U.S. sanctions and falling international benchmarks.
Russian crude shipped out of all major export terminals on the Black Sea, Baltic Sea, and Far East port of Kozmino fetches just about $40 per barrel currently, per Argus Media data cited by Bloomberg on Tuesday.
The discount of Russia’s crude to Brent has widened since the U.S. sanctioned the top Russian oil producers and exporters, Rosneft and Lukoil. In addition, Brent prices have slipped on the prospect of a peace deal in Ukraine and concerns about a global glut.
Russia’s crude prices have lost 28% over the past three months, per Bloomberg’s estimates, reducing revenues for the Russian state.
Oil and gas revenue is the single biggest budget income for the Kremlin, which has relied on energy export revenues to fund the war in Ukraine.
Falling oil prices and strengthening Russian currency are set to slash Russia’s oil and gas revenues by nearly 50% in December from a year earlier, to the lowest level since August 2020, Reuters calculations showed last week.
Revenues for the state from oil and gas are set to reach $5.15 billion (410 billion Russian rubles) this month, nearly halved from December last year, and the lowest in over five years. The last time Russia had this roughly level of oil and gas revenues, at $5.1 billion (405 billion rubles), was in August 2020, when oil prices were plunging as the pandemic crushed demand.
Apart from lower international oil prices and a stronger ruble, the widening discount of Russia’s flagship crude grade, Urals, has also hurt Russian revenues in recent weeks, following the U.S. sanctions on Rosneft and Lukoil.
The Urals discount to Brent has widened to the highest level since May 2023 since the U.S. announced the sanctions at the end of October.
By Charles Kennedy for Oilprice.com
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