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    Russian Oil and Gas Revenues Slump, Contributing to Record Budget Deficit


    The Russian finance ministry reported on Monday that, according to preliminary data, the federal budget of the country has registered a deficit of 1.76 trillion roubles ($24.78 billion) in January, as energy revenues decreased while expenditures rose.[0] In January, there was a decrease of 46% from the previous year in tax revenue generated from oil and gas, whereas expenditures rose by 59% due to the war in Ukraine.[1]

    In January, Russia's government saw a dramatic decrease in their oil and gas earnings, resulting in the most significant budget deficit for the initial month of the year since 1998 at least.[0] Urals crude — Russia’s key export blend — trades at a significant discounts to benchmark prices due to Western sanctions on Russian exports.[1]

    The EU-wide ban on Russia oil products – like diesel, gasoline and jet fuel – took effect Sunday alongside a Group of Seven (G7) price cap on the same items.[2] In the months leading up to the sanctions against Russia, imposed in December 2022, the amount of Russian crude oil exported to Europe has decreased. According to a November 2022 report from the International Energy Agency (IEA), Russian crude oil imports had decreased to 1.4 million barrels per day. In October 2022, U.S. Energy Information Administration (EIA) data showed that U.S. crude exports to the European Union (EU) exceeded 1.55 million barrels per day.[3]

    In January, the ministry reported a 28% decrease in non-energy related revenues, partially attributing it to a modification in the regulations for the value added tax.[4] By March 1, President Vladimir Putin has demanded that the government present a plan to determine the cost of Russian oil in order to counterbalance the sanctions' adverse effects on budget income. This demand was prompted by Putin's military aggression against Ukraine.[5]

    Oil prices seem to have bottomed out: according to official figures, in January the average price for a barrel of Russian Urals crude was $49.5, up slightly from $46.8 in late December.[6] January 2023 saw Russia's oil and gas revenues affected by Western price caps and embargoes, with the Urals blend trading at under $50 a barrel – a 42% decrease from January 2022.[4]

    Chinese, Indian, and other foreign buyers are consuming a greater amount of Russian crude, compensating for the reduction in commerce with Europe.[7] However, Russia is also lobbying hard for overland routes to Central Asia, Pakistan, Iran and North Korea — cutting vessels out of the equation.[8]

    0. “Russia's oil and gas revenue crashed by nearly 50% at the start of 2023, leading to a wider budget deficit as Moscow's spending soars” Yahoo! Voices, 6 Feb. 2023,

    1. “Russia's Deficit Hits $25 Billion as Energy Income Slumps” Financial Post, 6 Feb. 2023,

    2. “West's new oil sanctions aim to tighten screws on Russia” CNA, 6 Feb. 2023,

    3. “U.S. Crude Oil Exports To EU Support WTI As Global Benchmark” Seeking Alpha, 2 Feb. 2023,

    4. “Russian Budget Deficit Swells on Increased War Spending, Falling Energy Revenues” The Moscow Times, 7 Feb. 2023,

    5. “Russia's Oil Cargoes Surge Ahead of EU Import Ban” gCaptain, 30 Jan. 2023,

    6. “Latest Western oil embargo expected to have minimal impact” The Bell, 7 Feb. 2023,

    7. “Russia’s oil revenues plunge as EU’s oil war enters round 2” POLITICO Europe, 6 Feb. 2023,

    8. “Discount Strategy Has Limits for Russian Products” Energy Intelligence, 2 Feb. 2023,

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