Oil extraction in Russia. Illustrative photo.
Helsinki – Russia's oil export earnings recovered in March and April from levels in January and February, reaching the highest level since November last year. This follows from an analysis published by the independent Finnish Center for Energy and Clean Air Research (CREA). At the same time, it is expected that Moscow will be able to continue to increase revenues from the sale of oil, reported the server of the American television CNBC.
The findings show that Moscow has recently been successful in raising money from fossil fuel exports again, despite the European Union imposing a ban on imports late last year and the G7 group of economically advanced nations coming up with a broader cap on Russian oil prices. At the end of the recent summit in Japan, the G7 leaders said that the price ceiling on Russian oil and oil products is working, that Russia's income from their sale has decreased, and that countries around the world are benefiting from falling oil and gas prices.
Energy market analysts from the CREA Institute indicated that the failure of the so-called price cap coalition to revise price levels and enforce this policy has caused the measures to lose strength, integrity and credibility.
“The EU has not fulfilled its commitment, that it will revise the price cap every two months to ensure that this cap remains below the average market price,” said CREA analyst and report co-author Lauri Myllyvirta. “This is a clear sign that enforcement is not working,” he added.
Earlier this year, data showed that Russia's fossil fuel export earnings fell sharply in December. It appeared to mark the effectiveness of a policy aimed at Russia's oil revenues and prompted calls for even tougher measures to help Kiev win. However, the latest CREA findings show that Russia's tax revenue from oil exports rose six percent month-on-month in April thanks to a rise in exports in March. However, it should be added that the Kremlin's income was significantly lower than in April last year, when prices rose sharply.
As a result of higher export earnings in March, Russia's tax revenue from the extraction of mineral resources rose by five percent in April compared to the previous month. And an even higher increase is expected in May. This means that after bottoming out at the beginning of this year, oil tax revenues are recovering thanks to increased sales.
Analysis by the CREA center showed that since the introduction of the ban on the import of Russian oil into the EU and the establishment of a price ceiling for Russian oil by the G7 group, Moscow's income from oil exports by sea amounted to an estimated 58 billion euros (1.4 trillion CZK). Most of this oil was transported by tankers insured or owned by Europe.
CREA estimates that Russia's revenues could be reduced by another 22 billion euros if the oil price ceiling were reduced to $30 a barrel and price caps on oil products would be revised accordingly.
Currently, the price ceiling for Russian oil is $60 per barrel. This ceiling was introduced by the G7 countries, Australia and the EU on December 5 last year. In addition, the EU and Britain introduced a ban on the import of Russian oil by sea. In February of this year, a price ceiling of USD 100 per barrel was introduced for Russian oil products, such as diesel, and USD 45 per barrel for petroleum products, such as heating oil. The goal of the price caps is to limit Russia's revenue from fossil fuel exports, which Moscow is using to finance its invasion of Ukraine.
The US Treasury Department estimates that Russia's revenue from oil sales has fallen to just 23 percent of Russia's budget since the beginning of this year. Before the invasion last February, they accounted for 30 to 35 percent of the budget.