Additional Coverage:
Russia’s crude oil exports have plunged to a two-year low, deepening the country’s economic woes and putting further pressure on the Kremlin’s finances. Oil and gas sales are crucial for the Russian government, representing approximately 30% of its revenue and funding the ongoing war in Ukraine. However, these vital funds are dwindling as export rates plummet.
Recent financial data shows average daily exports have fallen by 170,000 barrels to 3.24 million, resulting in a 4% drop in weekly export earnings to $1.2 billion. Former head of Ukraine’s National Bank, Kyrylo Shevchenko, suggests that despite recent production increases by OPEC+, Russia’s prioritization of price over volume indicates ongoing production challenges. This analysis is supported by reports of a significant drop in Russian crude oil tanker loadings.
While OPEC+ member states recently agreed to increase oil production by 411,000 barrels per day for the third consecutive month, this move could further exacerbate Russia’s economic difficulties by potentially driving down crude prices.
The strain on Russia’s economy is intensifying as the conflict in Ukraine continues. A senior British military advisor recently disclosed that Russia has lost an estimated £330 billion in energy revenue due to sanctions.
Simultaneously, Russia’s defense spending has soared to £109 billion, now representing 40% of government expenditure. For the first time since the Soviet era, defense spending has eclipsed social spending.
To offset these losses, particularly the substantial losses at Gazprom, the Kremlin is reportedly planning to increase gas prices for industrial users. Gazprom itself reported a net loss of £9.5 billion last year, a stark indicator of the economic challenges facing Russia.