Russia’s Oil Revenue Sinks to Six-Month Low as Urals Price Drops

Russia's oil revenue plummeted in August as crude prices fell to $59 per barrel, down 22% from the previous year. The Urals, Russia's primary export grade, averaged nearly $95 per barrel in the spring following the Iran war, which drove buyers towards non-Persian Gulf barrels. However, total Russian oil and gas revenue dropped 16% year-over-year in August to 424 billion rubles.

Oil and gas supply nearly a fifth of federal budget income. August's oil receipts were nearly 60% lower than July, which featured a substantial scheduled payment from Russia's profit-based tax on oil producers. The Kremlin also disbursed over 197 billion rubles to refiners in August to ensure domestic fuel availability. Refinery subsidies have amassed almost 916 billion rubles since January.

Ukrainian drone assaults have repeatedly damaged Russian refineries throughout the year. In retaliation, Russia imposed limitations on gasoline and diesel exports and increased fuel imports as domestic supplies grew scarce. The refinery shutdowns have also diminished Russia's capacity to incorporate its crude production. Every barrel unable to enter a refinery must find storage, export capacity, or remain buried.

Export capacity has its own set of challenges. Ukrainian strikes have disrupted terminals and shipping operations in the Black Sea and Baltic, limiting Russia's ability to reroute crude displaced by refinery outages. Deputy Prime Minister Alexander Novak claimed on Thursday that Russia's recent production decrease should rebound as refineries restart.

Rystad Energy anticipates a more severe decline. The consultancy recently revised its 2026 Russian crude production forecast to 8.95 million barrels per day and expects production to decrease to about 8.6 million barrels per day by 2027. Earlier this year, Russia had benefited from a sharp surge in global oil prices. August reinstated Urals near $59, refinery subsidies exceeded $2 billion for the month, fuel export constraints, and added strain on crude production.