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<ul class="summary-list"><li>Russia's oil revenue fell sharply year-over-year in October.</li><li>Oil-related tax revenue dropped 29% last month, while oil and gas proceeds fell more than 25%.</li></ul>Russia saw a double-digit drop in oil revenue last month, hitting an important source of funds for the Kremlin amid pressure on global crude prices. Moscow's revenue from oil-related taxes plummeted 29% year-over-year in October, from 1.48 trillion rubles to 1.05 trillion rubles, according to data from Russia's Finance Ministry. Oil and gas proceeds, which is largely made up of oil production taxes and profit-based taxes in the industry, also fell more than 25% to 1.21 trillion rubles.Total oil and gas revenue rose on a monthly basis, with October levels up more than 75% compared to September. However, that's largely because the profit-based tax on Russia's oil industry is due four times a year, with companies paying taxes in March, April, July, and October, <a target="_blank" class="" href="https://www.bloomberg.com/news/articles/2024-11-05/kremlin-oil-revenue-shrank-by-29-in-october-amid-lower-prices">Bloomberg reported</a>.The yearly drop has largely been fueled by <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/russia-economy-oil-war-revenue-crude-prices-opec-production-cut-2024-9">falling crude prices</a>. International crude prices logged their <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/oil-prices-today-israel-strike-iran-production-brent-wti-crude-2024-10">biggest drop in two years</a> last month after Israel's strike against Iran spared its oil infrastructure. Meanwhile, <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/us-oil-opec-crude-production-record-oil-prices-commodity-market-2024-11">US producers are pumping more than ever</a>, complicating efforts by OPEC+ to crimp supply and boost the price. Brent crude, the international benchmark, traded around $75 a barrel on Tuesday, down 11% over the last year. Meanwhile, Urals crude, Russia's flagship oil blend, traded around $63.57, down around 24% compared to the same time last year, Bloomberg data shows.The drop in oil revenue throttles a key source of funds for <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-ukraine-war-outlook-moscow-sanctions-west-firms-uchicago-2024-10">Russia's war-driven economy</a>, which is becoming increasingly strained under the rising costs of its invasion of Ukraine. Russia's oil and gas industries have accounted for around 30%-50% of Russia's federal budget revenue for the last decade, according to an <a target="_blank" href="https://www.oxfordenergy.org/publications/follow-the-money-understanding-russias-oil-and-gas-revenues/">analysis</a> from The Oxford Institute for Energy Studies. Russia's <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-outlook-defense-budget-spending-ukraine-war-putin-sanctions-2024-10">defense state spending</a>, meanwhile, is on track to hit a post-Soviet high in 2025.

Russia's oil revenue plummeted 29% in October amid volatile global crude prices

<ul class="summary-list"><li>Russia's oil revenue has plummeted as global crude prices fall. </li><li>Oil sales dropped to $1.44 billion in the week ending September 8, per data cited by Bloomberg.</li></ul>Russia's oil business has taken a hit, with the nation's crude revenue dropping to its lowest levels in seven months, according to Argus Media data cited by <a target="_blank" class="" href="https://www.bloomberg.com/news/articles/2024-09-10/russia-s-oil-exports-earn-the-least-since-february-as-prices-tumble">Bloomberg</a>.Moscow, which relies on <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-west-secondary-sanctions-hitting-oil-exports-payments-revenue-2024-3">crude sales</a> for a big chunk of its revenue, saw the gross value of its oil exports drop to $1.44 billion in the week ending September 8, down from $1.52 billion netted the prior week, the outlet reported. That's the lowest amount Russia has netted from crude exports since January, despite the nation pumping out 40,000 more barrels of oil a day over the last week.The decline has largely been fueled by <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/oil-prices-outlook-supply-demand-break-down-record-us-production-2024-9">plunging oil prices</a> as the demand outlook falters amid predictions of a recession in the US, while US producers continue to pump record amounts of crude. <a target="_blank" class="" href="http://oilprice.com">Urals crude</a>, Russia's flagship oil blend, has edged lower to $67.61 a barrel, down around 20% from its peak in the spring of this year.Russia is also selling less oil than it did in the prior years, thanks to weaker demand from its Asian customers and oil pipeline disruptions to Hungary in August. Russia's four-week average sales volume slumped to 3.13 million barrels a day as of September 8, down 30,000 barrels a day from the prior monthly average.Observed Russian crude shipments to Asia, in particular, dropped to an average 2.92 million barrels a day in the month over that time frame, around 10% below the average shipped earlier this year, the report said.Russia is set to make even steeper oil production cuts later in 2024, as part of <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/oil-price-crash-opec-saudi-arabia-us-production-brent-outlook-2023-12">OPEC's goal to boost crude prices</a>. The nation is planning to ramp up production cuts in October and November to make up for producing more than it promised earlier in the year, Russia's Energy Ministry said in a <a target="_blank" class="" href="https://t.me/s/minenergo_official/3799">post</a> on Telegram, though it didn't clarify how much further it would cut.

Russia's oil revenue has plunged as global crude prices tumble

<ul class="summary-list"><li>Trump's presidency may pressure Russia's oil and gas industry.</li><li>The EU is thinking about replacing Russian LNG with US shipments, potentially affecting trade dynamics.</li></ul>Russia's lucrative oil and gas industry could come under greater pressure when US President-elect Donald Trump takes office.Domestically, Trump is championing the US oil and gas industry and encouraging production — which is likely to underscore America's position as an oil and gas giant.Meanwhile, the European Union said it could consider buying more US liquefied natural gas in a deal with Trump that would address a trade deficit. The EU doesn't have to burn bridges to negotiate with Trump, because the bloc still imports LNG from Russia."We still get a lot of LNG from Russia, and why not replace it with American LNG, which is cheaper for us and brings down our energy prices," European Commission President Ursula von der Leyen told reporters on Friday."It's something where we can get into a discussion," she said, referring to US's trade deficit with the eurozone, which reached <a target="_blank" class="" href="https://ustr.gov/countries-regions/europe-middle-east/europe/european-union">$131.3 billion in 2022.</a>To be sure, it's ultimately up to EU importers to decide where to import energy supplies based on market conditions.However, at least one EU country — <a target="_blank" class="" href="https://www.ft.com/content/d23591fc-0463-4346-865c-0e851a256ed2">Belgium</a> — is calling on the bloc to ban Russian LNG imports to further squeeze Moscow's war chest.The EU — which previously relied on Russian energy — banned seaborne Russian crude imports and refined petroleum products following the full-scale invasion of Ukraine in February 2022.The EU has also cut most of its piped natural gas imports from Russia, replacing much of it with LNG from the US — which is now a top exporter of the fuel to Europe, accounting for <a target="_blank" class="" href="https://energy.ec.europa.eu/topics/carbon-management-and-fossil-fuels/liquefied-natural-gas_en">46% of the bloc's supply in 2023.</a>Russia accounts for 8% of the EU's LNG imports. Other major LNG exporters to the EU include Qatar and Algeria."It would be in the interest of the US that Europe continues to shun Russian fossil fuels, given the US oil and gas industry has been one of the key beneficiaries of this move," wrote Warren Patterson, the head of commodities strategy at <a target="_blank" class="" href="https://think.ing.com/articles/what-a-trump-presidency-means-for-oil-and-gas-markets/">ING,</a> on Friday.<h2 id="e98e057f-427c-49fe-80b4-6b3536753369">'Drill, baby, drill'</h2>Trump's victory could shake up the highly politicized energy industry as he has made it clear that he supports oil production."I make this pledge to the great people of America: I will end the devastating inflation crisis immediately, bring down interest rates, and lower the cost of energy," Trump said in his Republican National Convention speech in July."We will drill, baby, drill," Trump said.While Trump's pledges to loosen energy regulations in the US are seen as a boost to the industry, it could increase oil supplies — a negative for prices.For consumers, lower energy prices translate to lower pump prices and electricity bills.However, it would also pressure energy company profits and, in turn, discourage more production — which is at record levels in the US.But there could also be other moving parts in Trump's second term, including potential sanctions on oil supplies from Iran, Venezuela, and Russia — all of which could tighten global supplies and support prices.Even before Trump's second election, there are so many uncertainties surrounding the geopolitical economy of energy that <a target="_blank" class="" href="https://www.businessinsider.com/major-oil-producers-saudi-arabia-russia-diversify-economies-opec-shale-2024-10">Saudi Arabia and Russia,</a> two of the largest oil producers, are trying to diversify their economies.In the meantime, the broad energy market is taking a wait-and-see stance."Initial market reactions have been muted to Trump's election victory, but in the medium term, he is expected to reinforce the US' role as a leading oil and LNG exporter," wrote Kaushal Ramesh, the head of gas and LNG analytics at Rystad Energy research firm on Monday.

Russia's lucrative oil and oil industry is an easy target for Europe after Trump's election victory

<ul class="summary-list"><li>US crude production hit a new all-time monthly high in August.</li><li>This complicates things for OPEC+, which was planning to start increasing output in December.</li></ul>The US is pumping a record amount of oil. But that may not be welcome news to other crude-producing nations.Domestic output reached <a target="_blank" href="https://www.eia.gov/petroleum/production/">13.4 million barrels a day in August,</a> eclipsing all previous monthly <a target="_blank" href="https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&amp;s=mcrfpus1&amp;f=m">records</a>. According to US Energy Information Administration data, firms in Texas and New Mexico led the surge.That level of production puts the US at odds with the plans of other oil-producing nations. OPEC+, an alliance led by Saudi Arabia and Russia, has said it plans to begin in December a sequence of monthly output increases. But given the decline in the price of crude oil — down 20% from an April high — continued record production from the US, and weakening demand, <a target="_blank" class="" href="https://www.bloomberg.com/news/articles/2024-10-29/oil-traders-split-on-whether-opec-will-hike-supply-in-december">oil traders believe OPEC+ will delay its program</a> for a second time.It's the culmination of a multi-year period that saw OPEC+ members cut production to support higher market prices, only to be undercut by expanding production from non-OPEC exporters.Looking into 2025, analysts speculate that global demand will continue sliding, especially given <a target="_blank" href="https://www.iea.org/commentaries/china-s-slowdown-is-weighing-on-the-outlook-for-global-oil-demand-growth">China's decelerating oil consumption</a>. That's one reason the global oil surplus could swell to 1.2 million barrels per day next year, according to JPMorgan. Otherwise, expanding outflows from the US, Brazil, Guyana and Canada will also play a part."OPEC+ increasingly appears to be searching for El Dorado: an oil market where demand is strong enough that it can increase output and prices stay above $80 per barrel," wrote Bill Weatherburn, senior climate and commodities economist at Capital Economics. "We suspect that this won't be found in 2025 either as China's demand growth will remain soft and more oil supply from non-OPEC+ producers will enter the market."

The US is pumping more oil than ever, and it's complicating things for other crude-exporting countries

<ul class="summary-list"><li>Russia is still using blacklisted ships to transport its oil, per Bloomberg data. </li><li>The nation loaded at least 17 cargoes of oil and oil products onto ships sanctioned by the West.</li></ul>Russia is leaning more heavily on crude tankers that have been blacklisted from the West in a sign Moscow is still finding ways to skirt Western restrictions on its oil trade.Since April, Russian ports have loaded at least 17 cargoes of oil and oil products onto ships that have already been restricted by the West, according to Bloomberg ship tracking data.Moscow appears to have ramped up its use of sanctioned vessels over the last several months. A dozen sanctioned ships were known to load Russian crude and crude products in August and September, up from just one sanctioned ship recorded in April, the outlet reported.Many of <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/russia-sanction-oil-tankers-shadow-fleet-crude-exports-price-cap-2024-2">Russia's sanctioned oil tankers were idle</a> after they were placed under trade restrictions, but some seemed to have operated under the radar and have recently started to show up on digital tracking systems, Bloomberg reported.The Bratsk and Belgorod, for instance, two ships sanctioned by the West, had fallen off the map during their first trip after they had been sanctioned. But both reappeared this month after docking and unloading their cargoes in China, the outlet said.Another 20 sanctioned tankers are known to be idling near Russia's coasts or anchored at Russian ports, the report added.Putin has openly brushed off Western sanctions on its oil trade, calling the Western ban and $60 price cap on its crude "<a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/vladimir-putin-russian-oil-price-cap-eu-ban-production-cut-2022-12">stupid</a>" shortly after those measures were implemented. But even the nation's <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-west-secondary-sanctions-hitting-oil-exports-payments-revenue-2024-3">central bankers have admitted</a> that sanctions are crimping its oil business, with <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/russian-energy-revenue-crude-oil-prices-gas-exports-sanctions-ukraine-2024-1">Russia's energy revenues dropping</a> by nearly a quarter last year.Falling crude prices also appear to be hitting Russia's oil trade. In the first week of September, Moscow <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/russia-economy-oil-war-revenue-crude-prices-opec-production-cut-2024-9">pulled just $1.44 billion from its oil exports</a>, the lowest crude revenue recorded since January, Bloomberg previously reported.

Sanctioned tankers are back to transporting Russian oil in a blow to the West's efforts to restrict crude flows

<ul class="summary-list"><li>Winter winds and freezing temperatures have slowed Russian crude exports, Bloomberg reported.</li><li>The icy storms and a Ukrainian drone strike last week have helped knock shipments to an 8-week low.</li></ul>An icy blast of winter weather has stalled Russia's oil exports from a key Pacific port supplying Chinese buyers, Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-01-30/russia-s-oil-exports-by-sea-are-battered-by-winter-storms?srnd=markets-vp">reported</a> on Tuesday.The winter winds and freezing temperatures have reduced Russia's weekly crude flows, with 3.09 million barrels a day of oil shipped from Russian ports in the four weeks through January 28, down by about 250,000 barrels a day from the three weeks through January 21. The weekly average fell by 120,000 barrels a day.The wintry storms, coupled with loading disruptions caused by a Ukrainian drone strike last week, combined to force Russian crude exports to hit an 8-week low of 2.8 million barrels a day.While the chaos chilled activity at some ports, it was partly offset by a record 11 tankers loaded at Russia's Primorsk port (the largest oil-loading port in the Baltic Sea). Asian countries like China and India have emerged as big importers of Russian oil after the West levied heavy sanctions on the Kremlin following the invasion of Ukraine, making them crucial crude trading partners. But the shipments that do make it out of ports like Primorsk still have more hurdles to cross in the Red Sea, where Yemen's Houthi rebels continue to attack commercial ships passing through the key trading lane. While the Houthis have guaranteed Russian ships safe passage through the key waterway, ships carrying cargo of Urals crude and Russian naphtha have been attacked in the past few months.A reduction in shipping ability follows on the heels of Russia agreeing to cut oil output as a part of the OPEC+ decision to suck oil supply out of the market to boost prices. The Kremlin has said it will cut about 500,000 barrels a day below the May-June average for the first quarter of the year.

Winter winds are freezing Russia's crude oil shipments to China

<ul class="summary-list"><li>The West is still taking in billions worth of Russian oil products, a new think tank analysis shows.</li><li>Russia sold $1.3B of oil to Turkey in the first half of the year before it made its way to the West.</li></ul>Russia is still passing off billions of dollars worth of oil products to the West — a sign that the West is still struggling to throttle Moscow's war revenue with strict sanctions. Russia is still exporting its crude to Turkey, where refineries process the oil and later export crude products to the West, according to <a target="_blank" class="" href="https://energyandcleanair.org/publication/sanctions-hypocrisy-g7-imports-eur-1-8-bn-of-turkish-oil-products-made-from-russian-crude/">a new analysis</a> from the Centre for Research on Energy and Clean Air.CREA data shows that Russia sold $1.3 billion worth of oil to three Turkish refineries in the first half of the year. G7+ nations, meanwhile, purchased around $2 billion of oil products of Russian origin from Turkish refiners, the think tank estimated.Western countries have ramped up their purchases from those three Turkish refineries since Russia began its invasion of Ukraine, the researchers added. The US, for instance, increased imports from those refineries by 335% on a yearly basis in the first half of 2024."G7+ countries have displayed little desire or political will to address the refining loophole and stop it since the beginning of Russia's full-scale invasion of Ukraine. While the loophole goes unchecked, G7+ countries have actually increased their imports from non-sanctioning countries, taking advantage of the situation by simply switching their supplier from Russia to third countries that are essentially functioning as Russian middlemen merchants," the researchers said. It's not the first time Russia used its trading partners to <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/russia-oil-fuel-new-york-india-trade-western-sanctions-economy-2023-2">pass off energy products to the West</a>. Indian refiners, for instance, funneled around 89,000 barrels of gasoline and diesel a day to New York, a 2023 Kpler analysis found.Asian buyers of Russian oil, though, have pulled back in recent months, with Russia's crude shipments to the continent dropping around 10% since the spring, according to Argus Media data cited by <a target="_blank" href="https://markets.businessinsider.com/news/commodities/russia-economy-oil-war-revenue-crude-prices-opec-production-cut-2024-9">Bloomberg</a>. Turkey is the last-remaining "<a target="_blank" class="" href="https://www.bnnbloomberg.ca/business/international/2024/09/10/oil-price-rout-drives-russian-revenues-to-seven-month-low/#:~:text=(Bloomberg)%20%2D%2D%20Plunging%20oil%20prices,from%20a%20weakening%20global%20market.">short-haul market</a>" for Russian oil sent from its western ports, taking in around 210,000 barrels of Russian crude a day the last month, the outlet reported.Still, Western sanctions have worked to crimp Moscow's war revenue. Trade restrictions, which include a $60 price cap and ban on Russian oil, dented Russia's crude profits by 14% in 2023, a previous CREA analysis found, which has also been aided by Russia's voluntary oil production cuts and <a target="_blank" href="https://markets.businessinsider.com/news/commodities/russia-economy-oil-war-revenue-crude-prices-opec-production-cut-2024-9">falling crude prices</a>.Russia's crude sales dropped to $1.4 billion at the start of September, the lowest level recorded since January, Bloomberg reported.

Russia is still passing $2 billion worth of its oil products to the West via middlemen, think tank says

<ul class="summary-list"><li>Russia added 74 ships to its shadow fleet of oil tankers, according to the KSE Institute.</li><li>The new ships outnumber the 49 tankers that have been sanctioned by the West, Bloomberg reported.</li></ul>Russia has beefed up its under-the-radar fleet of oil ships, a sign that the nation is taking bigger steps to evade Western trade restrictions, according to a Ukrainian think tank.The KSE Institute, a think tank within the Kyiv School of Economics, pointed to Russia's so-called <a target="_blank" class="" href="https://www.businessinsider.com/russias-dark-fleet-oil-exports-strong-red-sea-risks-strategy-2024-1">shadow fleet of tankers</a>, a covert collection of tankers the nation has been known to use to keep its oil trade going despite <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-west-secondary-sanctions-hitting-oil-exports-payments-revenue-2024-3">strict sanctions</a> from the West.Russia was known to carry its oil on 307 shadow ships from the start of 2023 through June 2024, with around 74 new ships being added to its fleet over the first half of this year, the think tank said in a <a target="_blank" href="https://kse.ua/about-the-school/news/the-core-of-russia-s-shadow-fleet-identifying-targets-for-future-tanker-designations/">report</a>.The new ships outnumber the 49 tankers that have been sanctioned by the West for helping Russia evade sanctions, <a target="_blank" href="https://www.bnnbloomberg.ca/investing/2024/08/14/russias-bigger-shadow-fleet-helps-beat-oil-sanctions-kse-says/">Bloomberg</a> reported — a possible sign the nation is trying to offset the impact of Western sanctions on a key source of income for the Kremlin. Around 45 of the known shadow ships have operated regularly between 2023 and the first half of this year, the report added. Those ships make up the nation's "core" shadow fleet of tankers, accounting for 28% of all oil Russia traded under the radar in the first half of this year."To put additional pressure on Russia's ability to finance its war of aggression against Ukraine, we urge coalition governments to designate additional shadow fleet vessels," the think tank added, suggesting sanctions were needed on Russia's core fleet in particular. "Their removal would represent significant sunk costs, while forcing Russia to rely more heavily on mainstream fleet ankers, which fall under the price cap."The West began tightening the screws on Russia's oil trade soon after it invaded Ukraine in 2022, with the G-7 nations <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/russian-economy-oil-exports-price-cap-sanctions-g7-ukraine-war-2024-4">establishing a $60 price cap on Russian crude</a>. <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-west-secondary-sanctions-hitting-oil-exports-payments-revenue-2024-3">Sanctions have dealt a blow</a> to Russia's oil revenue, central bankers said earlier this year, despite Putin <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/putin-russia-western-sanctions-oil-price-cap-natural-gas-china-2022-12">brushing off the impact of trade restrictions</a> as insignificant.

Russia has expanded its shadow fleet that it uses to evade oil sanctions, think tank says

<ul class="summary-list"><li>Russia's energy outflows have surged over the past month, despite pledges to limit them.</li><li>The four-week average of fuel exports hit 2.4 million barrels a day, the most since September.</li></ul>Russian energy export levels look to be moving away from the latest round of pledges Moscow made to OPEC+.The four-week average of fuel exports hit 2.4 million barrels a day through December 17, the most since September, according to Vortexa data compiled by <a href="https://www.bnnbloomberg.ca/russia-ramps-up-fuel-exports-undermining-part-of-opec-pledge-1.2013878#:~:text=At%20the%20latest%20meeting%20of,four%20weeks%20to%20Dec.%2017" target="_blank" rel="noopener">Bloomberg</a>.And the more volatile weekly export flow topped 3 million, the highest since March. That includes a 42% jump in diesel and gasoil exports as well as a 19% increase in naphtha exports.Meanwhile, the four-week average of seaborne crude oil exports climbed to 3.28 million bpd, up from <a href="https://www.bloomberg.com/news/articles/2023-12-05/russia-s-oil-exports-beset-by-storms-slip-to-a-three-month-low" target="_blank" rel="noopener">3.04 million bpd exported</a> in the four weeks through December 3. But during last month's OPEC+ meeting, members pledged to extend oil production cuts as well as export curbs.That includes a further 900,000 barrels per day of exports, with 200,000 barrels coming from Russia. Deputy Prime Minister Alexander Novak later confirmed this voluntary reduction would also include crude and oil products.He then followed to say that Russia would further cut oil exports volumes by possibly <a href="https://www.reuters.com/business/energy/russia-eyes-additional-oil-export-cuts-about-50000-bpd-december-novak-says-2023-12-17/" target="_blank" rel="noopener">50,000 bpd this month</a>, as oil prices slumped in early December. This adds to a 300,000 bpd cut already in effect.This <a href="https://markets.businessinsider.com/news/commodities/russian-crude-exports-output-pledge-opec-crude-oil-prices-demand-2023-11">isn't the first time</a> Russian oil outflows counteracted pledges made by Moscow. October exports also surpassed the 300,000 bpd commitment.

Russia undermines its pledge to OPEC+ as crude oil and fuel exports jump

<ul><li>India was enjoying a discount of $12.6/bbl from Russian imports in Q1 of FY23, which came down to $8.8/bbl in Q1FY24.</li><li>Russia is going for voluntary cuts to ensure the “oil market remains balanced”.</li><li>Oil cartel OPEC+ has curbed output but it has been going up in Iran and the US. </li></ul>India has been enjoying the discounted <keyword id="45185" type="General" weightage="20" keywordseo="crude-oil" source="Orion">crude oil</keyword> from Russia for over a year now. But the discount that India seems to be enjoying is coming down even as Russia remains one of its biggest suppliers as it imported crude to the tune of $12.4 billion in Q1FY24. “This year, in Q1FY24, while India continues to import crude oil at discounted rate from Russia compared with other countries; the premium has actually gone down relative to last year,” says Jahnavi Prabhakar, economist at Bank of Baroda. In the April-June quarter of FY23, the premium that India enjoyed from <keyword id="8112813" type="General" weightage="20" keywordseo="russian-crude" source="Orion">Russian crude</keyword> – that’s the difference between international prices and Russian supply — was at $12.6 per barrel. In the same quarter this year, it has come down to $8.8 per barrel. Russia also a<a href="https://www.reuters.com/business/energy/russia-cut-oil-exports-by-300000-bpd-september-2023-08-03/">nnounced in early August</a> that it’s planning to cut crude oil production by 300,000 barrels per day. Prime Minister Alexander Novak had said that the country is going in for voluntary cuts to ensure the “oil market remains balanced”. It will also cut its exports by that quantity, he added. This is in addition to a pledge to reduce its oil output by around 500,000 barrels per day, or some 5% of its oil production, from March to the end of the year. Falling discounts <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Time period </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Avg international crude price </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Russian crude price </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Discount/premiums </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Q1FY23 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">$112 per barrel </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">$99.4 per barrel </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">$12.6 per barrel </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Q1FY24 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">$77.7 per barrel </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">$68.9 per barrel </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">$8.8 per barrel </td></tr></tbody><tbody></tbody></table>Source: Bank of Baroda The 3x jump in Russian imports In spite of the changing discounts, Russia has turned one of India’s largest suppliers over the last one year. India is one of the world’s top importers of crude oil thanks to its high demand and a large population. In Q1FY23, Iraq was one India’s top suppliers — and has imported over $10.8 billion worth of crude oil from the country. Back then, India’s crude bill to Russia was around $4.6 billion. Now, thanks to its discounted offerings, Russia became the most important source for import of crude oil. In Q1 FY24, the figure now stands at $12.4 billion — which is thrice of what it was last year. “In Q1FY24, the average price of international crude oil stands at $77.7/bbl. During this period, UAE and Saudi Arabia have been able to provide crude oil at much higher rates of $86/bbl and $85/bbl respectively. Notably, Russia has been providing crude oil at much discounted rates than its global counterparts at $69/bbl,” says Prabhakar. Crude under pressure On the other hand, the crude oil dynamics have also undergone many changes — with uncertainty of Chinese demand, slow growth across the world, recession in Europe and more. In June, Saudi Arabia the <a href="https://www.businessinsider.in/finance/news/crude-oil-prices-may-hit-100/bbl-after-opec-decision-say-analysts/articleshow/100763692.cms">kingpin of oil cartel OPEC+ </a>consisting of 13 oil producing nations – decided to go in for another round of production cuts – by 1.6 barrels per day. They came to this decision after the earlier round of production cuts did not produce the necessary effects. Experts expect oil prices to remain under pressure in the short term due to changing production dynamics. “Oil prices have surged above $80 per bbl recently after OPEC+ curbed the output. US waterborne crude exports this month are set to hit the highest since March amid lower exports from the Middle East. At the same time, oil output is rising elsewhere. Exports from Iran surged to 2.2 mbpd in August, US output surged to 12.7 mbpd last week,” said Ravindra Rao, VP – head commodity research at Kotak Securities.

India imports $12.4 billion worth of crude from Russia but discounts are waning

<ul class="summary-list"><li>Crude oil notched year-to-date highs on Wednesday, driven by inventory updates and Fedspeak. </li><li>In testimony on Wednesday, Jerome Powell said the Fed is still looking to cut rates this year. </li></ul>Crude oil prices spiked on Wednesday following new data signaling smaller growth in crude inventories and after the Federal Reserve chief's latest messaging on rate cuts. <a href="https://markets.businessinsider.com/commodities/oil-price?type=wti">West Texas Intermediate</a> saw a brief surge of nearly 3.2%, reaching $80.67 per barrel, while intraday trading saw the May <a href="https://www.ice.com/products/213/WTI-Crude-Futures/data?marketId=5869843" target="_blank" rel="noopener">Brent crude oil</a> futures contract climb by 1.54% to hit $83.3 per barrel.The uptick followed data from the US Energy Information Administration showed energy companies added a smaller amount of crude to inventories than expected last week, signaling higher demand. Gasoline stockpiles, meanwhile, saw a steep drop. Fed Chair Jerome Powell's testimony to Congress on Wednesday also helped the demand narrative, as he <a href="https://www.businessinsider.com/fed-interest-rate-cut-outlook-powell-inflation-data-us-economy-2024-3">reiterated the central bank's plans</a> to cut rates this year. Looser Fed policy could stimulate the economy, increasing demand for oil and energy products, especially if the Fed can pull off a soft landing and avoid a recession. Powell said the Fed is keeping the door open for rate cuts this year, contingent on "greater confidence" in sustainable inflation toward the 2% target.Crude prices have inched up in 2024, thanks to <a href="https://markets.businessinsider.com/news/commodities/oil-outlook-2024-opec-cuts-us-production-boom-saudi-arabia-2023-12#:~:text=The%20cartel%20has%20vowed%20to,to%20prop%20up%20oil%20prices.">OPEC's daily 2.2 million barrel production cut</a> planned for the first quarter, while the Israel-Hamas war, attacks on shipping lanes in the Red Sea, and the West's sanctions on Russia's oil trade have kept a floor under the price of oil in 2024. OPEC <a href="https://www.opec.org/opec_web/en/press_room/7305.htm" target="_blank" rel="noopener">announced on Sunday</a> that some member states would extend existing output cuts to June.

Oil prices spike on crude inventory update and Powell's rate-cut outlook

<ul class="summary-list"><li>Russia's oil revenue soared by 90% in April compared to the previous year, Bloomberg reported. </li><li>The rise comes as sanctions have struggled to curb Russian energy flows since the war in Ukraine began. </li></ul>The major funding sources for Vladimir Putin's invasion of Ukraine — the country's oil and gas revenues —doubled in April despite sanctions. <a href="https://www.bloomberg.com/news/articles/2024-05-06/russia-s-budget-is-getting-twice-as-much-oil-money-as-a-year-ago?srnd=markets-vp" target="_blank" rel="noopener">Bloomberg reported on Monday</a> that total oil and gas revenues in April jumped by 90% compared to a year earlier, reaching 1.23 trillion rubles ($13.5 billion). That sent the Kremlin's energy-related taxes soaring to 1.053 trillion rubles ($11.5 billion), marking a 111.9% leap from April 2023.Russia's Federal Tax Service data reveals that the budget revenue spike was pegged to the Urals crude price of $70.34 per barrel, a significant jump from $48.67 a year ago when the G-7 countries had first imposed a price cap of $60 a barrel on Moscow's oil exports. Meanwhile, the increase in energy revenue was also driven by a weaker domestic currency, with the exchange rate of rubles per dollar declining by 20.5% compared to the previous year, Bloomberg said, citing data from Russia's tax service. Bloomberg Economics notes that Russia's robust revenue growth amid sanctions stems from strong global demand, low supplies driven by geopolitical risks, newly established export infrastructure in Russia, and the country's strict control over exporters' cash flows.Bloomberg data also indicates Moscow will see approximately $126 billion in oil and gas tax revenue in 2024. Bloomberg Economics noted that these figures are "just slightly above the current government's projections."Moscow's military aggression in Ukraine has shown no signs of winding down as the war drags on through its third year and sanctions looks to cripple Moscow's ability to keep funding the invasion. Putin's Russia has devised multiple strategies to bypass Western restrictions, including cultivating export ties with nations like<a href="https://www.businessinsider.com/russia-economy-building-trade-route-train-rail-india-iran-2024-3"> China, India, and those in the Persian Gulf</a>.China, a longstanding partner, <a href="https://www.businessinsider.com/china-russia-iran-economy-outlook-help-assistance-western-sanctions-oil-2024-3">has been aiding Russia in avoiding sanctions</a> by facilitating Moscow's "dark fleet" of crude tankers, which circumvent international maritime rules through covert maneuvers, and also by supporting Renminbi trading between the two countries. That said, Bloomberg reported that April's oil and gas revenue to Russia's budget still dropped by about 6.4% compared to March, primarily due to substantial subsidies to the nation's fuel producers.

Russia saw its oil revenue double in April despite Western sanctions

<ul class="summary-list"><li>Oil prices ended down 7% last week and are lower this year-to-date, despite Middle East tensions.</li><li>China's economic downturn, the US shale boom, and clean energy are contributing to current oil price trends.</li></ul>The oil markets aren't what they used to be, and two of the world's biggest producers of the commodity are feeling the pressure.Oil prices have been depressed this year because <a target="_blank" class="" href="https://www.businessinsider.com/oil-price-today-middle-east-israel-hezbollah-conflict-china-economy-2024-10">China</a> — the world's largest oil importer — is in a prolonged economic downturn. The US' massive boom in oil production over the last 15 years has also kept prices low.Now, Saudi Arabia and Russia are both trying to diversify their economies away from energy, which makes up about 40% and 20% of their GDP, respectively.With the shift, Saudi Arabia and Russia are trying to create new economic engines that can sustain the country for decades, Abishur Prakash, the founder of The Geopolitical Business, a strategy advisory firm in Toronto, told Business Insider.The existential reorientation comes amid what Prakash terms a "geopolitical misalignment," even in the face of a potential supply disruption."The reality is that Middle Eastern oil supplies are in the bull's-eye of geopolitics. A potential back-and-forth between Israel and Iran, which is increasingly likely, will draw in the region's energy ecosystem," he said.But this year, markets have largely shrugged off supply concerns stemming from the Middle East conflict — a break from history, when regional problems sent prices higher.<h2 id="45bcbf13-524d-48a5-aa00-144efa7dd75c">Moving away from oil</h2><a target="_blank" href="https://www.eia.gov/tools/faqs/faq.php?id=709&amp;t=6.">Saudi Arabia and Russia</a> tied for the world's second-largest oil producer after the US. Last year, they each accounted for 11% of the world's oil supply.While Saudi Arabia and Russia are still the world's top oil exporters, the <a target="_blank" class="" href="https://www.eia.gov/todayinenergy/detail.php?id=61584">US — which posted record oil shipments in 2023 — is fast becoming a competitor</a> for market share.In 2016, Saudi Arabia launched a grand <a target="_blank" href="https://www.businessinsider.com/vision-2030-saudi-arabia-plan-future-proof-oil-economy-2023-8">Vision 2030</a> plan to transform its oil-dependent economy into a more diversified one that includes tourism and sports as key growth pillars.Recently, the kingdom has been indicating that it's frustrated with low oil prices. It's giving up its $100 per barrel price target and is ready to increase oil output, the <a target="_blank" rel=" nofollow" class="" href="https://www.ft.com/content/1d186f62-5941-4f9e-aef1-7d93a8a696cd">Financial Times</a> reported in late September.This means that Saudi Arabia is looking to corner a larger market share instead of targeting higher profit margins by restricting output.Russia has also expressed a desire to stop over-relying on oil exports."We are moving towards reducing the share of volatile income and reducing Russia's dependence on oil and gas in favor of boosting our domestic economy," Anton Siluanov, Russia's finance minister, told <a target="_blank" href="https://russian.rt.com/business/article/1379636-minfin-anton-siluanov-intervyu">RT Television's Arabic</a> service earlier this month.He said that Russia would instead aim to boost its domestic economy but did not specify how.Russia is already moving its trade eastward to address Western sanctions. <a target="_blank" class="" href="https://www.energyintel.com/00000192-ae46-dc01-adba-efff87000000">Saudi Arabia,</a> too, is looking to sell more oil to developing countries, whose electric vehicle adoption lags behind China and the West.Asia's emerging economies are expected to drive <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/global-oil-demand-prices-supply-opec-us-crude-producers-iea-2024-6">global oil demand</a> over the rest of the decade, as the world's consumption rises from 101.7 million barrels a day in 2023 to 105.6 million barrels per day by 2030, according to a June report from the <a target="_blank" class="" href="https://www.iea.org/news/slowing-demand-growth-and-surging-supply-put-global-oil-markets-on-course-for-major-surplus-this-decade">International Energy Agency</a>.<h2 id="6ae61431-8898-4c52-9abf-24b4a2055996">Prices, renewable energy, and the US all play a role</h2>Despite geopolitical tensions in the Middle East over fears of a widening war, oil prices haven't been on the climb.To be sure, <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/oil-price-prediction-brent-crude-israel-iran-opec-demand-citi-2024-10">oil prices could still</a> soar if the issues in the Middle East worsen.And there were several price spikes — such as in early October over concerns that Iranian oil facilities could be hit and in August over tensions in the Middle East — but they were shortlived. Oil prices dropped about 7% last week after the concerns subsided.International benchmark <a target="_blank" href="https://markets.businessinsider.com/commodities/oil-price">Brent</a> crude futures are down about 4% this year to date to around $74 a barrel, and US <a target="_blank" class="" href="https://markets.businessinsider.com/commodities/oil-price?type=wti">West Texas Intermediate</a> futures are down 1.3% so far this year to around $70 a barrel.A key contributor to the price trend comes from the US, which has witnessed a significant rise in oil production over the last 15 years following the shale oil boom.Matthew Huber, a Syracuse University professor who specializes in energy, climate politics, and resource geography, said the US has nudged Saudi Arabia out of its role as a swing producer."I think the US has now overtaken this role and because we're not in the Middle East, geopolitical conflict there is less impactful," Huber added.Then there's renewable energy."The explosion of electric vehicle adoption in China (and presumably or eventually in the US and Europe) means the writing is on the wall and we're going to reach 'peak demand' for oil sometime soon," said Huber. "It was always a good idea to diversify one's economy away from just oil but now more than ever."<h2 id="f0b0eb00-b6b7-4f2f-9acd-d2d555ca6010">The role of OPEC</h2>The changing dynamics of oil also sharpens the long-standing question of OPEC's influence and relevance. The oil producer group led by Saudi Arabia accounts for about 30% of global crude production."It goes in cycles. They were obviously relevant in the 1970s when they were able to increase prices almost single-handedly," said Huber."But the problem is when oil prices spike, it sends oil companies searching for temporarily profitable oil," he added, referring to the US shale boom as the most recent example.OPEC also faces rifts within its members, who have competing priorities."The big question now is whether OPEC members are all aligned in terms of oil targets," said The Geopolitical Business's Prakash, who added that not all OPEC members may be on board with Saudi Arabia's plan to boost production.A potential Trump presidency in the US could drive <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-election-impact-trump-win-election-financials-energy-rbc-2024-10">domestic oil and gas production.</a>"If OPEC can't bring everybody together, and members go their separate ways, it will lead to a further polarization of the Middle East," said Prakash."Instead of energy bringing the region together, like it did in the past, energy coupled with geopolitics could fragment the Middle East," he said.

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