The United States aims to intensify sanctions pressure on Russian oil supplies to the global market, according to Dalip Singh, Deputy National Security Advisor to the U.S. President. He stated that new measures would target the sale and transportation of Russian oil.

Earlier, Bloomberg reported that in September, prices for Russian Urals crude oil fell below $60 per barrel, the price cap set by the G7 and the EU. As a result, Russian oil export revenues for the first half of September dropped by 30% compared to late June.

The average monthly price of Urals is used to calculate taxes that contribute to the Russian budget. Based on this, Bloomberg concluded that these developments would significantly impact tax revenues for Russia.

If we take these claims at face value, the picture appears grim. However, it is essential to approach this information with caution. The U.S. and the EU have created numerous obstacles for Russia's financial and banking sectors, industry, IT, and gas sectors (e.g., bans on LNG technology supplies and sanctions against Arctic LNG). However, their efforts to curb Russian oil exports have faced challenges from the start. Perhaps initial decisions were made hastily, making them difficult to reverse. This doesn’t mean the measures were painless for Russian oil producers, but their consequences were promptly addressed.

Russian oil export volumes have not decreased and are limited only by the OPEC+ deal. According to Bloomberg, in the second week of September, Russia's seaborne oil exports reached 3.25 million barrels per day, comparable to 2021 levels. The price cap is not effective, as noted by officials not only in Russia but also in Europe and the U.S. For over a year, Urals prices have been above $60 per barrel, influenced by global benchmarks and the discount for Russian oil. This discount, which peaked at $34 per barrel in March 2022, is currently estimated at $10–13 per barrel.

Attempts by the U.S. to restrict Russia’s so-called shadow fleet of oil tankers were somewhat effective, but Russia adapted quickly by changing ship owners and flags.

Konstantin Simonov, head of the National Energy Security Fund, acknowledges that costs for Russian companies have risen, but the market has mitigated attempts at regulation. He believes sanctions will continue to tighten regardless of the U.S. administration.

The U.S.’s strategic goal is to push Russia out of the hydrocarbons market, though this is currently impossible and risky, even for America. The focus remains on reducing Russian oil prices and increasing transportation and trade costs for Russian companies. Limiting physical export volumes (e.g., to no more than 3 million barrels per day) is impractical due to the real-time tracking required.

As for Russian budget revenues, Sergey Tereshkin, CEO of the OPEN OIL MARKET platform, notes that falling oil prices won’t affect 2024 revenues due to the significant share of taxes derived from production rather than export. Taxes like the mineral extraction tax (MET) and additional income tax (AIT) play a key role. The budget has already received about 70% of expected AIT revenue, mitigating risks from price fluctuations.

According to Dmitry Skryabin, portfolio manager at Alfa Capital, Urals prices are currently around $61–63 per barrel, slightly above the $60 budget threshold. Revenues above this threshold go to the National Wealth Fund (NWF), meaning basic oil revenue remains secure.

Analyst Vladimir Chernov highlights that oil and gas revenues still exceed the Finance Ministry’s baseline projections, and the weaker ruble partly offsets export losses.

Energy expert Kirill Rodionov believes Russia’s 2024 budget remains on track, with Brent oil prices likely to range between $70–75 per barrel in the coming months. The primary risks will emerge in 2025–2027, as OPEC+ countries, including Russia, may need to increase production sharply, causing nominal and real price declines.

Simonov concludes that while oil and gas revenues might decrease by year-end, they have already exceeded expectations by 908 billion rubles over eight months. Moving forward, Russia must focus on building its own oil trading system, pricing, settlements, insurance, and transportation to tackle strategic challenges effectively.


Translated using ChatGPT

Sourse:  https://rg.ru/2024/09/21/davlenie-na-neftianoj-eksport-rossii-hotiat-usilit.html