Russia said on Thursday it had added the equivalent of $9.4 billion to its government emergency reserve fund, with the money coming from additional oil and gas revenues the country has received so far. present in 2022.
The Russian government can easily dip into the rainy day fund and has been actively doing so since the invasion of Ukraine and Western sanctions that crippled the Russian economy and sent inflation into double digits and the highest level since more than two decades.
Russian oil and gas revenues, however, continue to sink and exceed earlier budget forecasts, as the war in Ukraine has pushed up oil and gas prices. The EU, US and UK aim to reduce the flow of oil money to Russia via embargoes and bans.
Hardest hit, the latest set of EU sanctions, ban Russian oil imports by sea within eight months and also ban EU insurers from providing insurance for Russian oil going anywhere in the world . This insurance ban could deal a fatal blow to Russian oil exports, as it would cripple Russia’s ability to export crude anywhere in the world, analysts say.
The market will see a dramatic change with this ban, in a six-month sell-off period, but until then oil money is flowing into Russia at high rates.
Russia expects to receive up to $6.37 billion in additional oil and gas revenue in June, its finance ministry said last week, as energy commodity prices have risen since the Russian invasion from Ukraine.
As oil revenues pour in, the Russian economy is collapsing due to Western sanctions, double-digit inflation and a major reduction in consumer purchasing power.
Last month, Russia’s federal government announced it would raise minimum wages and pensions from June 1 as it sought to counter the effects of double-digit inflation closely tied to Western sanctions. A host of Western companies left as a result of the sanctions as well as reputational pressures, contributing to the sanctions’ negative effect on Russia.
By Tsvetana Paraskova for Oilprice.com
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