Russian Oil & Gas Revenues Drop Nearly 40%

STOCKHOLM – Russia’s oil and gas export revenues fell nearly 40% in January as price caps and western sanctions squeezed earnings from Moscow’s most lucrative export, the International Energy Agency (IEA) said on Tuesday.

The country’s oil and gas export earnings totaled $18.5 billion in January, down 38% from the $30 billion Moscow received in January 2022, a month before its invasion of Ukraine, the agency said IEA figures shared with Reuters.

IEA Executive Director Fatih Birol said Western measures targeting Russian energy exports had achieved their goals of stabilizing oil markets and reducing Moscow’s oil and gas export revenues.

“We expect this drop in oil and gas revenues to be even more pronounced in the coming months,” he said. “And even steeper in the medium term due to lack of access to technology and investment.”

International restrictions imposed on Russia in response to the Ukraine war, including a $60 per barrel price cap imposed by the Group of Seven countries, have resulted in Russia’s Ural crude blend being sold at a deep discount to Brent , which traded at around $84 a barrel on Tuesday.

The 27-nation European Union also banned Russian oil imports by sea from December and has imposed sanctions on exports to Russia of technology needed for oil refining. In addition, the United States and Britain have imposed restrictions on Russian oil imports.

Moscow relies on oil and gas revenues — about 11.6 trillion rubles ($155 billion) last year — to fund its fiscal spending and has been forced to start selling international reserves to cover a deficit, which was magnified by the cost of his invasion of Ukraine.

Meanwhile, Europe is trying to wean itself off Russian gas after Moscow halted pipeline supplies to the EU following its invasion of Ukraine in February 2022. As a result, European gas prices rose to record highs and countries struggled to find alternative sources of supply and initiate energy saving measures.

Birol said EU countries have made strides in improving energy security over the past year, including rapid deployment of renewable energy and heat pumps to reduce the need for fossil fuels.

But he said the risks remain and countries must continue their efforts to conserve energy and secure supplies. Europe’s ability to source enough gas could be challenged by rising demand from China, or if Russia cuts off gas supplies to Europe.

“We have every reason to work as hard as we did last year,” said Birol.