Moscow reports drop in oil and gas revenues as oil prices fall after US-Iran deal

Tax revenues for the Russian state from oil and natural gas sales fell by 22.7 percent to 3.66 trillion roubles (almost one trillion Czech crowns) in the first half of this year. Russia’s Finance Ministry announced this today. Oil and gas revenues account for around a fifth of total budget revenues.

In June alone, revenues rose to 683.6 billion roubles from 678.9 billion roubles in May. Year on year, they were up 38 percent. This was driven by a recovery in global oil prices triggered by the war in Iran.

Russia could now face problems. Oil prices have fallen after the United States and Iran reached a preliminary agreement in June to end the fighting. According to traders’ data and Reuters calculations, prices for Urals crude loaded at ports in western Russia fell by around 60 percent this week compared with their March peak.

Russia’s budget for this year forecasts revenues of 8.92 trillion roubles from oil and gas sales. Total budget revenues are expected to reach 40.28 trillion roubles this year. Last year, budget revenues from oil and gas fell by 24 percent to 8.48 trillion roubles, their lowest level since 2020.

Reuters reported this week that, according to its calculations based on data from the European Network of Transmission System Operators for Gas (ENTSOG), deliveries of gas from Russian energy giant Gazprom to Europe via the TurkStream pipeline rose by five percent to 8.7 billion cubic metres in the first half of the year. Turkey is the only remaining transit route for Russian gas to Europe, as Ukraine decided not to extend its gas transit contract with Moscow. The contract expired in January 2025. According to Reuters calculations, Gazprom’s gas exports to Europe fell by 44 percent to 18 billion cubic metres last year, their lowest level since the mid-1970s.

Russian liquefied natural gas (LNG) exports rose by 9.9 percent to 16.6 million tonnes in the first half of the year, according to LSEG data. This was helped by increased deliveries from the new Arctic LNG 2 project. The project began operations in December 2023, but its first shipment to end customers in China was not delivered until last August due to US sanctions related to the war in Ukraine. LNG exports to Europe rose by 14 percent to nine million tonnes in the first half of the year.