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Urals blend trades at discount to Brent
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Moscow depends on oil and gas revenue to fund budget
spending
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Says will increase foreign currency sales to plug deficit
(Adds analyst comment)
By Darya Korsunskaya and Jake Cordell
Feb 3 (Reuters) - Russia's monthly budget revenues from
oil and gas fell in January to their lowest level since August
2020 under the impact of Western sanctions on its most lucrative
export, Finance Ministry data showed on Friday.
Monthly tax and customs revenue from energy sales declined
46% in a year - reflecting the fact that, while the price of the
global benchmark Brent blend was little changed, the
average monthly price of Russia's Urals blend was down
42%, according to the ministry.
Moscow relies on income from oil and gas - last year around
11.6 trillion roubles ($165 billion) - to fund its budget
spending, and has been forced to start selling international
reserves to cover a deficit stretched by the cost of its
invasion of Ukraine.
January's figure stood at 425.5 billion roubles ($6.05
billion).
The Finance Ministry on Friday said it would almost treble
its daily sales of foreign currency to 8.9 billion roubles ($130
million) a day over the next month to compensate for the fall in
oil and gas revenues.
Analysts at Promsvyazbank said those sales could almost
double in March as Moscow tries to address the deficit.
WESTERN PRESSURE
The West - previously Russia's main energy market - has
responded to the invasion of Ukraine by targeting its energy
revenues through unprecedented sanctions that also restrict
sales to third countries - and are set to tighten further.
Brussels has blocked the seaborne imports that accounted for
90% of Russian crude oil sales to the European Union, and member
states have cut the share of Russian gas in their import mix
from more than 40% before Russia invaded Ukraine to under 15%.
An EU embargo on purchases of Russian refined oil products,
including diesel and jet fuel, takes effect on Sunday and could
hurt Moscow more than an embargo on crude oil. Price caps, if
agreed, could further hamper sales to third countries.
The international restrictions, including a $60 a barrel
crude price cap imposed by the Group of Seven major powers, have
meant that Russia's Urals blend - which previously traded at a
similar price to Brent - now sells at a heavy discount.
The average price in January was $49.48 a barrel, the
finance ministry said, down 42% on January 2022.
Unless prices for Russian oil recover in the coming months,
analysts at Credit Bank of Moscow said on Friday the budget
deficit could hit 5.5 trillion roubles ($78 billion) this year,
equivalent to 3.8% of GDP.
Russia's budget for 2023 foresees a deficit of 2% of GDP,
and any larger shortfall would require a mix of higher foreign
currency sales, lower spending, more borrowing or tax rises.
Russia's Kommersant newspaper reported on Friday that the
Kremlin was looking at changing the way it calculates taxes on
oil and gas companies to cover some of the shortfall.
On Friday, Brent was trading at around $82, and Urals at around $53.60. ($1 = 70.31 roubles) <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Price cap on Russian refined fuels set to disrupt trade FACTBOX-EU embargo, price cap target Russian oil products EU struggles to agree Russian oil product price cap, seeks Friday deal FACTBOX-How the EU ban on Russian crude affects oil flows Russian central bank sees inflation risks rising in 2023 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Darya Korsunskaya; Additional reporting and writing by Jake Cordell; Editing by Kevin Liffey and Barbara Lewis)
