Russia Could Lose $19 Billion In Budget Revenues
- 21.07.2025, 19:32
Because of the new oil price ceiling.
New EU sanctions that include a flexible ceiling on Russian oil prices could deprive the Russian budget of every fifth ruble of planned oil and gas revenues, Freedom Finance Global predicts.
According to analysts' estimates, due to the new ceiling mechanism, which will now be set 15% below average market prices, the Russian treasury will miss out on 1.5 trillion rubles in commodity taxes annually. That's about 18% of the amount the Russian Finance Ministry planned to collect this year (8.9 trillion rubles), reports The Moscow Times.
"This measure is capable of putting noticeable pressure on the Russian economy, and above all on federal budget revenues," warns Freedom Finance analyst Vladimir Chernov. - The risks are amplified by the fact that the country is still heavily dependent on raw material revenues, and most of the oil is exported to states where the ceiling can be applied by restricting access to insurance, logistics and financial settlements."
The oil "ceiling" introduced at the end of 2022 was at $60 per barrel: at a price higher than that, "black gold" from Russia was prohibited to be transported on Western tankers and insured with the help of Western financial institutions. The new ceiling, according to the decision of the European Commission, will be $47.6 per barrel, and its next review will take place in three months.
In June, the Russian Urals grade was sold abroad at an average of $59.8 per barrel. But because of the EU sanctions, the cost of Russian oil may collapse in some cases to $45 "taking into account logistical and political discounts," Chernov predicts: "This will lead to a further decline in foreign exchange earnings and increase the fiscal pressure on the Russian economy."
Oil and gas budget revenues are already falling rapidly: at the end of the first half of the year they were 14% lower than last year, and in May and June the decline in annual terms exceeded 30%. As a result: in six months, the treasury has a "hole" of 3.8 trillion rubles - 6 times more than in the same period of 2024.
The lowering of the oil price ceiling "may become the most serious problem for Russian oil exports since the introduction of the European embargo at the end of 2022," according to experts at the Institute of Energy and Finance.
The fact is that in recent months, the cost of Urals was kept below the ceiling, and therefore it began to be actively transported again by Greek shipping companies. They replaced the "shadow" tankers that fell under sanctions and were shut out of the oil trade. According to the IEF, there are already 426 of them, which is more than half (55%) of the total deadweight of the "shadow fleet".
Because of the reduced ceiling, these cargo carriers will again refuse Russian oil, but it may not be possible to replace them with a sufficient number of vessels of the "shadow fleet", the IEF fears: "As a consequence, there is likely to be an appreciable reduction in Russian oil exports by sea, as well as a sharp rise in the cost of oil tanker chartering services for Russia as payment for the risk of being on the sanctions list of Western countries".