Russia can achieve record revenue from oil and gas

Russia has a large income from oil and gas and will probably have a record year in terms of revenue. In the context that the Russian economy is expected to shrink by 10% this year, this revenue will help mitigate the negative impact of sanctions.

According to Bloomberg, despite the difficulties faced by domestic consumers and the financial blockade for the government from abroad, Russia still earned nearly $321 billion from energy exports this year, an increase of more than 1/3 compared to 2021.

According to the Institute of International Finance (IIF), Russia’s current account surplus in 2022 could reach a record $240 billion. The estimate of multinational bank Goldman Sachs is more than 205 billion USD.

Experts say that Russia could achieve record revenue from the sale of gas due to the significant increase in the price on the spot market. Thanks to this Moscow will offset rising inflation.

Russia can get record revenue from oil and gas. Illustration.

Analysts at macroeconomic forecasting firm TS Lombard London say that the combination of Ruble A sharp devaluation and an increase in oil prices in USD terms will bring an additional USD 103 billion to the Russian budget. A “healthy balance sheet” will help the Russian Government maintain public spending in the absence of access to international capital markets.

According to Igor Yushkov – a leading expert of the University of Finance and the National Energy Security Fund, even taking into account the fact that Russia exports part of the volume of Urals oil at a significant discount, a decrease of about 20 – 30% compared to Brent, which trades at 70 – 80 USD per barrel, this price is still high and gives the budget more money than expected.

Gas is more profitable as gas prices have increased throughout 2021 and with it Gazprom’s earnings. In January 2022 alone, Gazprom sold more than $9.5 billion of gas and the revenue will only grow.

Experts say that money still flows into Russia even if sanctions are maintained. The Western embargo on Russian energy could change the situation. However, not all countries are willing to take this step.

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