To The Moon

Russia's oil tax revenue for March plummeted by 48% year-on-year to 494.9 billion rubles (approximately $6.18 billion), based on calculations from data released by the Ministry of Finance on April 3. Combined oil and gas revenue in the federal budget for the month fell nearly 43% compared to the same period last year, to 617 billion rubles. This sharp decline reflects the price of Urals crude—the benchmark used for tax calculations, which is based on February prices. Government data showed the average Urals price during that period was below $45 per barrel, significantly lower than the $59 per barrel assumed in the 2026 budget. Under ongoing energy sanctions, remaining buyers of Russian oil have demanded substantial discounts, putting downward pressure on prices. The appreciation of the ruble also contributed to the steep drop in revenue. Declining oil and gas tax income has widened Russia’s budget deficit and stalled economic growth, while expenditures related to the war in Ukraine continue to drain fiscal resources. However, as early as next month, Russia’s oil and gas revenue is expected to see a significant surge. Driven by conflicts in the Middle East, Urals crude prices rose sharply in March. By the end of the month, the price of Urals crude shipped to India—one of Russia’s key buyers—exceeded $120 per barrel, trading at a premium to the Brent benchmark. The conflict involving Iran has nearly completely blocked the Strait of Hormuz, a critical passage for energy exports from Gulf countries. Since Russian oil does not rely on this route, it has become more attractive to Asian buyers. At the same time, to curb rising oil prices, the United States has permitted a number of countries, including India, to purchase large volumes of Russian crude already at sea. This exemption has further stimulated Asian demand for Russian oil. According to informed sources, thanks to the sharp reversal in oil prices, Moscow no longer plans significant cuts to budget spending and may even increase defense expenditures amid a prolonged war in Ukraine. However, Russian President Vladimir Putin has repeatedly urged the government and oil producers to exercise restraint in spending, as high oil prices may only be temporary. The Urals price used for calculating March oil and gas revenue was $44.59 per barrel, down from $61.69 a year earlier. The exchange rate used was 76.85 rubles per U.S. dollar, compared to 92.9 rubles in March 2025, meaning the budget received fewer rubles for each barrel of oil produced and sold. On a monthly basis, March oil revenue rose to a five-month high, benefiting from Russia’s oil tax payment schedule—profit-based taxes are largely paid in four installments annually (March, April, July, and October).