Russia's Oil Export Revenue Plummets to Post-Invasion Low in November

Significant Decline in November Revenues

The Russian Federation's oil export revenues reached their lowest monthly point since the full-scale invasion of Ukraine in 2022, according to recent data from the International Energy Agency (IEA). In November, Russia's earnings from oil and petroleum product exports amounted to approximately $10.97 billion. This figure represents a substantial decrease of $3.59 billion compared to November of the previous year and a $1.92 billion drop from October's revenues.

The IEA highlighted that both the volume of exports and the prices for Russian oil have fallen, contributing to this decline.

Factors Contributing to the Revenue Drop

Several key factors have been identified as drivers behind the sharp reduction in Russia's oil export revenues:

• Reduced Export Volumes: Total oil exports decreased by roughly 400,000 barrels per day (bpd) in November, settling at approximately 6.9 million bpd. This reduction is partly due to buyers assessing the implications and risks associated with more stringent sanctions.
• Weaker Oil Prices: The price of Urals crude oil experienced a notable decline, falling by $8.2 per barrel to $43.52/bbl in November. This price point is significantly below the G7 price cap of $60/bbl, which was implemented in December 2022 to limit Russia's war funding capabilities.
• Impact of Sanctions and Geopolitical Events: Tightening international sanctions, including recent measures by the United States against major Russian oil producers like Rosneft and Lukoil in October, have increased caution among buyers. Furthermore, Ukrainian attacks on Russia's 'shadow fleet' vessels and energy infrastructure, particularly in the Black Sea, have disrupted seaborne exports. Seaborne exports through the Black Sea reportedly fell by 42% to 910,000 bpd.

Broader Economic Implications for Russia

The sustained decline in oil revenues poses significant challenges for the Russian Federation's state finances, which heavily rely on fossil fuel income. The combination of high military spending, persistent inflation, and diminishing oil revenues is placing considerable strain on the Russian budget.

Analysts anticipate that Moscow is on track to record a $50 billion deficit this year, an amount equivalent to approximately 3% of its GDP. In response to this fiscal pressure, the Kremlin reportedly plans to increase taxes on both consumers and businesses in the coming year to help bridge the widening budgetary gap. Additionally, Russian oil production in November declined to 9.03 million bpd, falling about 500,000 bpd below the target set by the OPEC+ agreement.