OMM Newsroom
Russia’s oil and natural gas revenues fell despite a sharp rise in global oil prices, as a stronger ruble and payments to fuel producers weighed on budget receipts. Ukrainian drone attacks on refineries also disrupted processing and exports, Anadolu Agency reported.
Federal budget revenues from oil and gas dropped 17.2% year on year in January-September to 5.47 trillion rubles ($67.7 billion), leaving the energy sector with a shortfall of about $14.1 billion, according to the Finance Ministry.
Total budget revenues rose 10% to $367 billion during the period, while non-energy revenues increased 18.8% to $299.3 billion.
Energy receipts declined even as conflicts in the Middle East pushed up energy prices. Higher prices can increase the value of Russian exports, but budget revenue also depends on indicators used to calculate taxes.
The average price of Urals, Russia’s main export crude, reached $92.1 a barrel in September, up from $56.8 in September last year. The 62% rise boosted oil producers’ foreign-currency revenues but did not translate into a comparable increase in budget income.
Russia prices oil exports mainly in foreign currencies, while production taxes and budget revenues are calculated in rubles. The ruble’s appreciation against the US dollar therefore meant export earnings converted into fewer rubles. The lower average dollar exchange rate was cited as one reason for the energy revenue shortfall over the first nine months.
The Russian Central Bank said the official dollar exchange rate stood at $1 as of Oct. 24, below the $1.14 per dollar assumption used in the 2026 federal budget. The Finance Ministry expects recent increases in oil prices to have a clearer positive effect on the budget in coming months, as they are reflected in tax collections with a delay.
Drone attacks disrupt refinery operations
Ukrainian drone attacks on Russian plants and energy infrastructure disrupted processing operations. Russia’s 32 major refineries have a combined capacity of about 6.5 million barrels a day, but output fell to 3.8 million barrels a day in June, according to the International Energy Agency (IEA).
The 30% year-on-year decline was the lowest in more than 20 years, the IEA said in a report on Sept. 17. Russian refineries were reportedly hit by a drone attack every three days during the first eight months of the year. By the end of August, only five of the 32 major plants had escaped attacks.
Gas production fell about 20% year on year, while diesel production dropped 30% over the same period, the IEA reported.
Russian Deputy Prime Minister Alexander Novak recently said the attacks were continuing, but protective measures had reduced the damage. He said repairs had been accelerated and modernization schedules at some plants might have to be postponed.
Moscow extended restrictions on exports of gas and certain petroleum products until Jan. 31, 2027. The restrictions include exceptions for diesel shipments under agreements between producers and under intergovernmental deals.
Subsidies add to budget pressure
The export restrictions limit the benefits companies can gain from high fuel prices in foreign markets. The Economic Development Ministry expects petroleum exports to fall from 125.8 million tons last year to 98.5 million tons this year, while crude oil exports are forecast to rise from 230.8 million tons to 244.7 million tons.
Under Moscow’s fuel damper mechanism, the budget pays refineries when global market prices are more favorable than domestic prices. The scheme encourages companies to sell products at home but increases public spending.
Oil companies received $3.78 billion under the scheme last month, up from $2.44 billion in August. The payment was the highest since April 2022 and contributed to the annual decline in energy revenues, according to Finance Ministry data.
Oil and gas revenues in the first nine months fell below the baseline set under the budget rule. Higher oil prices supported public income but did not offset pressure from the exchange rate and subsidy payments.
The Finance Ministry cut its 2026 forecast for oil and gas revenues from $110.46 billion to $93.87 billion, a reduction of $16.59 billion for the year.
The Economic Development Ministry expects oil and gas condensate production to decline from 511.4 million tons last year to 494.2 million tons this year, before increasing to 500 million tons next year.
With Russia’s federal budget deficit widening to $64.27 billion in January-September, Moscow raised its year-end deficit forecast from 1.6% of national income to 3.2%.
Future energy revenues will depend on oil prices, the exchange rate, the recovery of plant production and the amount paid in fuel subsidies.
