(Bloomberg) -- The Kremlin’s oil revenues in November fell from a year earlier for a second consecutive month, spurred by lower prices for the nation’s crude.
Russia’s oil-related taxes, a key source of financing for Russia’s war against Ukraine, generated 605.2 billion rubles ($5.8 billion) for the budget last month, down around 21% from a year ago, according to Bloomberg calculations based on finance ministry data published Wednesday.
The decline came after crude prices slumped on concerns about global oversupply, despite geopolitical tensions in the Middle East and a November decision by the Organization of Petroleum Exporting Countries and its allies to keep withholding some barrels from the market.
Russia’s finance ministry calculated the month’s tax levels based on a price of $64.72 per barrel of Urals — the nation’s key export blend — down from $81.69 a year ago.
Russia’s combined oil and gas proceeds in November, with nearly 76% of the total generated by the oil industry, fell by nearly 17% to 801.7 billion rubles, Bloomberg calculations show.
The decline in oil revenues may somewhat limit the Kremlin’s ability to finance its war in Ukraine, as military spending is the single largest area of expenditure for the nation this year. Russia plans to continue hiking its spending on national defense and domestic security in 2025, with total costs set at a historic high of over 13 trillion rubles.
Russia is comfortable with current crude prices, yet a decline below $60 per barrel may “create complications for its economy and financial markets,” the nation’s central bank said in a financial stability report published Friday.
The OPEC+ alliance, where Russia is one of the de-facto leaders, is set to finalize plans on Thursday for production policy in the first months of 2025. So far, a proposal to delay the return of some barrels by three months hasn’t drawn opposition, according to delegates, who asked not to be identified because the discussions are private.
Oil traders have already priced in a first-quarter pause for OPEC+, yet the oil market faces a surplus in 2025 even if OPEC+ doesn’t add a single barrel. To prop up global prices, the alliance may need a more drastic decision or risk further declines.
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