The major funding sources for Vladimir Putin’s invasion of Ukraine — the country’s oil and gas revenues —doubled in April despite sanctions.
Bloomberg reported on Monday that total oil and gas revenues in April jumped by 90% compared to a year earlier, reaching 1.23 trillion rubles ($13.5 billion). That sent the Kremlin’s energy-related taxes soaring to 1.053 trillion rubles ($11.5 billion), marking a 111.9% leap from April 2023.
Russia’s Federal Tax Service data reveals that the budget revenue spike was pegged to the Urals crude price of $70.34 per barrel, a significant jump from $48.67 a year ago when the G-7 countries had first imposed a price cap of $60 a barrel on Moscow’s oil exports.
Meanwhile, the increase in energy revenue was also driven by a weaker domestic currency, with the exchange rate of rubles per dollar declining by 20.5% compared to the previous year, Bloomberg said, citing data from Russia’s tax service.
Bloomberg Economics notes that Russia’s robust revenue growth amid sanctions stems from strong global demand, low supplies driven by geopolitical risks, newly established export infrastructure in Russia, and the country’s strict control over exporters’ cash flows.
Bloomberg data also indicates Moscow will see approximately $126 billion in oil and gas tax revenue in 2024. Bloomberg Economics noted that these figures are “just slightly above the current government’s projections.”
Moscow’s military aggression in Ukraine has shown no signs of winding down as the war drags on through its third year and sanctions looks to cripple Moscow’s ability to keep funding the invasion.
Putin’s Russia has devised multiple strategies to bypass Western restrictions, including cultivating export ties with nations like China, India, and those in the Persian Gulf.
China, a longstanding partner, has been aiding Russia in avoiding sanctions by facilitating Moscow’s “dark fleet” of crude tankers, which circumvent international maritime rules through covert maneuvers, and also by supporting Renminbi trading between the two countries.
That said, Bloomberg reported that April’s oil and gas revenue to Russia’s budget still dropped by about 6.4% compared to March, primarily due to substantial subsidies to the nation’s fuel producers.
