Russia’s oil revenue more than doubled in April from a year earlier, despite international sanctions intended to limit the flow of money to fuel President Vladimir Putin’s war in Ukraine.

Proceeds for the Russian budget from oil-related taxes jumped to 1.053 trillion rubles ($11.5 billion) last month compared to nearly 497 billion rubles in April 2023, according to Bloomberg calculations based on Finance Ministry data. Total oil and gas revenues in April increased nearly 90% year-on-year, to 1.23 trillion rubles, according to the data. 

Rising prices for Russia’s crude helped to drive the increase in budget revenue. State taxes in April were calculated based on a Urals price of $70.34 per barrel, up from $48.67 a year ago when it was dampened in the wake of a price cap the Group of Seven nations imposed on Russian oil exports, data from the Federal Tax Service show.

To be sure, a weaker ruble also contributed to the revenue growth: the April tax calculations are based on an exchange rate of 91.69 rubles per dollar, 20.5% weaker than a year before, according to the tax service data.

Russia’s oil sector is a key source of revenue for the nation’s budget that includes a planned sharp increase in military spending this year to support the Kremlin’s invasion of Ukraine that’s now in its third year. The US and its allies have imposed several rounds of energy sanctions in response, seeking to reduce Putin’s ability to fund the war. 

The restrictions, which also limit provision of western shipping and insurance services, have had modest impact. Russia has been able to circumvent the price caps by deploying a shadow fleet of tankers and expanding the circle of non-western oil buyers.

The price-cap policy is “increasingly unenforceable,” an organization at the heart of the global insurance industry, the International Group of P&I Clubs, concluded last month. Meanwhile, India’s top oil refiner resumed Russian oil imports on ships owned by the sanctioned shipper Sovcomflot last week, paving the way for a restoration of deliveries disrupted by tightened US penalties earlier this year. 

What Bloomberg Economics Says...

Three reasons behind Russia’s robust revenue despite sanctions are:

(i) oil prices remain supported by strong global demand, constrained supply and geopolitical premia, (ii) Russia’s newly built export infrastructure, which increasingly relies on shippers, insurance and customers outside the sanctioning coalition, and (iii) Russia’s increasingly tight control over exporters’ cash flows.

Alex Isakov, Russia economist

April oil and gas revenue to Russia’s budget decreased by around 6.4% compared to March flows, according to Bloomberg calculations. The two months traditionally provide a boost to the budget because the so-called profit-based tax is mainly paid four times a year: in March, April, July and October.

Oil revenue to the state budget would have been higher in April if it weren’t for big subsidies paid to the nation’s fuel producers. The government paid out some 187 billion rubles to companies for domestic supplies of diesel and gasoline, according to the Finance Ministry. The payouts are intended partially to compensate producers for the difference in vehicle-fuel prices in Russia and abroad.

Russia will collect around $126 billion in oil and gas tax revenue in 2024, according to Bloomberg Economics calculations. The figures are “just a hair above the current government’s projections,” said Alex Isakov, Bloomberg Economics Russia economist.  

“Russia would break even on its war budget if Brent were to exceed $95, but its fiscal position will remain relatively sustainable at oil prices north of $70,” he said.