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Russia's oil revenue falls to $17.7bn despite higher exports, IEA says

·Reporter
·2-min read
Russian president Vladimir Putin. Photo: Gavriil Grigorov/SPUTNIK/AFP via Getty
Russian president Vladimir Putin. Photo: Gavriil Grigorov/Sputnik/AFP via Getty

Russia’s oil revenue fell last month as a decline in crude prices offset higher supplies overseas, the International Energy Agency (IEA) said on Wednesday.

Moscow’s revenue from crude exports fell to $17.7bn (£15.3bn) in August, the lowest since at around March, and down $1.2bn from a month earlier, according to the IEA's monthly oil report.

Brent crude (BZ=F) rose less than 0.1% to $93.21 a barrel. US light crude (CL=F) was trading flat at $87.29 in electronic trading on the New York Mercantile Exchange at the time of writing.

Read more: FTSE losses deepen and pound reverses gains as inflation worries persist

The Paris-based agency estimates the drop came even as Russia’s daily crude and oil products exports increased by 220,000 barrels to 7.6 million barrels a day.

However, oil production is forecast to fall by 1.9 million barrels a day by February next year once EU sanctions on the Kremlin's exports of crude and refined petroleum products comes into full force.

"Russian oil revenues may take a further hit when EU sanctions on Russian oil imports go into effect starting from December," the IEA said.

Earlier this year, EU leaders announced a ban on Kremlin oil to reduce the flow of petrodollars to Russia following its invasion of Ukraine. The sanctions are set to kick in on 5 December.

It comes as the group of seven richest countries (G7) also agreed a global price cap on purchases of Russian oil.

In a joint statement released earlier this month the G7 pledged to ban the transportation of all Russian crude sold above a certain price.

The plan would allow buyers of Russian crude, under a capped price, to continue getting crucial services like financing and insurance for tankers.

The finance ministers said they planned to implement the cap in line with European Union sanctions, and all EU member states would have to sign off on the deal.

Russia in turn has vowed to halt exports to nations that introduce such measures and re-direct flows to countries that continue to work on market terms.

Shares in oil giants Shell (SHEL.L) were muted on Wednesday afternoon in London, while rival BP's (BP.L) fell 0.2% to 461p.

China also faces its biggest annual decline in oil demand in more than three decades as COVID lockdowns weighs on growth in the world’s second largest oil importer, the IEA said.

Oil demand in the country is expected to decline by 420,000 barrels a day, or 2.7%, this year in the first annual drop since a 1% retreat in 1990, according to the agency.

The pullback in 1990 is the only previous retreat in IEA's records dating back to 1984.

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