Russian oil revenues down nearly 50% on price cap: US

Russian government oil revenues plunged nearly 50 percent in the first five months this year, US Deputy Treasury Secretary Wally Adeyemo said Thursday, six months since a price ceiling was enacted.

To restrict Moscow’s revenue after its invasion of Ukraine while making sure it keeps supplying the global market, a coalition involving the Group of Seven leading economies, European Union and Australia set a price cap of $60 per barrel of Russian crude in December.

This decline in oil revenue from a year ago “has occurred despite the fact that Russia is exporting more crude oil today than it did at the onset of the war,” Adeyemo said in prepared remarks at an event at the Center for a New American Security in Washington.

“Despite higher exports, Russia is making less money because its oil now trades at a discount of 25 percent relative to other global oil,” he added.

Asked how Washington assesses Russian revenues, a Treasury official who spoke on condition of anonymity said the United States has several tools — including observing the market prices that Russian exporters are receiving for oil.

Russian officials have also cited pressure from dwindling oil revenues, the official added, although noting there is no plan for when the price cap would be abolished.

For now, Russia is considering putting a floor on its revenue losses by moving away from taxation based on the market price of Urals — its dominant blend of oil.

Instead, Russian authorities would calculate taxes by assuming a price that is a “fixed significant discount to Brent, the global benchmark,” Adeyemo said in his prepared remarks.

While this suggests Russian oil firms will see their taxes rise even as the price cap drags on revenues, Adeyemo added that the change effectively “locks in a massive discount because of the impact of the price cap.”

Sanctions and export controls have made it tough for Russia to replace more than 10,000 pieces of equipment it has lost amid the war, according to Adeyemo.


© Agence France-Presse