**Russia’s Oil and Gas Revenues Continue to Decline**
The Russian Finance Ministry has reported a significant drop in oil and gas revenues for the third consecutive month, with a nearly 30% year-on-year decline in July. This trend is expected to continue, as the country’s energy exports remain under pressure from sanctions and declining global demand.
**Energy Exports Hit Hard**
Russia’s reliance on its energy exports has been severely impacted by the ongoing invasion of Ukraine and the subsequent international sanctions. The Ministry reported that oil and gas taxes collected in July totaled 787.3 billion rubles, a sharp decline of 28% compared to the same month last year. Over the first seven months of this year, oil and gas revenues fell by 19%, totaling 5.52 trillion rubles – below the 6.78 trillion rubles collected in the same period last year.
**Key Components of Energy Income Plummet**
The Mineral Extraction Tax (NDPI) revenue, a crucial component of Russia’s energy income, saw a staggering 38% year-on-year decline to 634.1 billion rubles. Oil companies contributed 543.4 billion rubles, a 36% decrease compared to July last year.
**Gazprom Exports Plummet**
Russia’s state-owned gas giant, Gazprom, has seen its exports to Europe hit historic lows not seen since the 1970s. The EU’s approval of the 18th sanctions package in July further reduced Russia’s energy revenues by lowering the price cap on Russian oil from $60 to $47.6 per barrel.
**Russia’s Economy Under Pressure**
To compensate for the declining oil and gas revenues, the Kremlin will reportedly continue tapping into the National Wealth Fund, which has already seen its liquid assets shrink by two-thirds since the start of the full-scale war in Ukraine. This move highlights the economic strain caused by Russia’s ongoing invasion and international isolation.
**US President Trump Weighs In**
In an interview with CNBC on August 5, US President Donald Trump suggested that falling oil prices could pressure Russian President Vladimir Putin to end the war in Ukraine. Trump claimed that if OPEC and OPEC+ countries continue to export more oil, Putin will have no choice but to stop the conflict.
This commentary suggests a glimmer of hope for a potential resolution to the ongoing conflict, as Russia’s economic situation becomes increasingly dire. However, it remains unclear whether this trend will lead to significant changes in Moscow’s policy towards Ukraine.
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