- Russia's oil and gas revenues rose more than 80% in February compared to a year earlier.
- This increase came despite sanctions imposed over Russia's invasion of Ukraine.
- Russia has recently been able to avoid sanctions and preserve revenues by invoking a price floor mechanism.
Russia has made a move to nearly double its energy revenues ahead of a presidential election later this month.
Russia collected 945.6 billion rubles ($10.4 billion) in oil and gas revenue in February, according to data from the country's Ministry of Finance released on Tuesday. In comparison, in February 2023 it was 521.2 billion rubles.
That means the energy giant's revenue from oil and gas has jumped more than 80% from a year ago, according to Bloomberg records. In particular, taxes on crude oil and petroleum products more than doubled over the same period.
Russia's enormous interests are particularly notable. That's because the country still faces massive Western sanctions over the Ukraine war.
Why is Russia still making so much money from oil?
The additional revenue Russia received in February came from increased taxes on domestic oil producers.
Russia already had a mechanism in place that allowed it to impose higher taxes on oil producers, but it simply did not take advantage of it.Russia applies floor price to oil sales in January Bloomberg reported on March 1, citing a letter from the Russian Federal Tax Service.
The Russian government's decision to impose a price floor comes after the price of Ural crude oil, Russia's main crude oil, has fallen due to the tightening of sanctions imposed by Western countries.
Russia is an energy powerhouse, with a third of its revenue coming from oil and gas. The European Union, Russia's single biggest customer before the war, has been trying to wean itself off Russian oil and gas over the past two years to strain the Kremlin's war chest.
A G7-led price cap on Russian oil of $60 per barrel also helped keep prices and the Kremlin's oil revenues in check.
However, the G7 restrictions do not restrict anyone from purchasing the products unless they use Western insurance or shipping services, and the Russian government is likely to direct its customer base to countries such as India and China in the East. successful.
Russia also managed to circumvent price caps and sanctions by using a huge “dark” fleet of aging ships and using intermediaries to “launder” the oil.
Elections are coming up this month
Western countries are tightening trade restrictions against Russia to force the Kremlin to halt the war in Ukraine. The US and EU have controversially imposed secondary sanctions to force compliance on companies outside their legal jurisdiction.
This move alarms Russia: Kremlin spokesperson Dmitry Peskov It admitted in February that there were problems with Chinese banking transactions.
However, President Vladimir Putin's government must continue to show stability, as the Russian people themselves may be running out of patience as the war drags on.
Russia's oil revenues don't just fund wars. The money will also go toward social spending that Putin promised Russians before heading to the polls later this month.
Russia's presidential election is scheduled to be held over three days from March 15 to March 17, with President Putin expected to win against three opponents.
