Bloomberg Reports Total Export Revenue for the Past Four Weeks
"Reflects Market Price Decline"
Putin Denies Pressure to End War Due to Oil Prices
Recently, as crude oil prices have plummeted below $50 per barrel, Russia's crude oil export revenues have also dropped to their lowest level in two years. On May 6 (local time), Russian President Vladimir Putin dismissed the possibility of ending the war due to falling oil prices. However, it has been revealed that the financial difficulties caused by declining oil prices are also affecting the management of Russia's sovereign wealth fund.
On May 7, Bloomberg News reported that Russia's crude oil export revenues over the past four weeks, up to May 4, totaled $4.96 billion, a decrease of $220 million (4%) compared to the previous four-week period. Bloomberg explained, "This is a result reflecting the price drop driven by the market," and added, "Over the past week, the average price of crude oil shipped from Russia's Baltic Sea ports fell below $50 per barrel."
In fact, there was little change in the actual volume of crude oil shipped. According to Bloomberg, over the four weeks ending May 4, the amount of crude oil shipped from ports across Russia averaged 3.29 million barrels per day, with almost no change from the previous week. However, for the most recent week, there was a decrease of about 190,000 barrels (6%).
The decline in export revenues is believed to have been largely driven by expectations that OPEC Plus (+), led by Russia and Saudi Arabia, would increase production. This is because there were forecasts that the production target for June would be raised.
Europe's policy of energy sanctions against Russia is also continuing. The European Union (EU) is planning additional sanctions on unofficial oil tankers used for transporting Russian crude oil. In addition, there are discussions about adding more than 150 tankers to the blacklist. The United States, too, may impose additional sanctions to pressure for an end to the war, especially since President Donald Trump has distanced himself from Russia by signing a minerals agreement with Ukraine.
On May 5, President Trump commented on the falling oil prices, suggesting that it would become difficult for Russia to continue the war in Ukraine. According to Reuters, Trump told reporters at the White House that day, "Because oil prices have dropped, we are in a good position to end the war, and they want to end it. Ukraine wants to end it."
President Putin immediately responded, making it clear that he would not tolerate such suggestions. According to the American weekly magazine Newsweek, Dmitry Peskov, spokesperson for the Russian president, dismissed Trump's remarks at a press conference on the morning of May 7, stating, "Oil prices do not influence national security decisions."
However, in reality, falling oil prices are affecting Russia's fiscal operations. According to Russian media outlet RBC, on May 7, Russian Finance Minister Anton Siluanov stated at a press conference that funds from the National Welfare Fund (NWF) would need to be used to cover this year's fiscal deficit caused by the drop in oil prices. He said, "We are planning net expenditures totaling 447 billion rubles."
RBC explained that, according to budget rules, Russia sells foreign currency from the National Welfare Fund when oil prices fall below $60 per barrel. Minister Siluanov said that the reason for recently adjusting budget parameters was the decline in oil prices, noting that oil and gas revenues had decreased by 2.6 trillion rubles, while non-oil and gas revenues had increased, resulting in the fiscal deficit expanding to last year's level.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
