12 months ago • 1 min
Data out on Friday showed that Russian energy revenues have fallen off a cliff.
What does this mean?
The EU and G7 both hit back after Russia invaded Ukraine last year. Europe slapped a ban on seaborne imports of Russian oil, and the G7 set a price cap on the nation’s slippery elixir. And those sanctions are hitting Mother Russia where it hurts: the nation’s key oil export blend has tanked in value, fetching about half what it sold for a year ago. That financial pinch couldn't have come at a worse time either. The war in Ukraine is already putting a serious strain on the country’s coffers, and now February’s revenue from oil and gas taxes – which accounts for a big chunk of government income – has come in 46% below the same time last year.
Why should I care?
Zooming in: Perilous production.
Those sanctions might have hit the price of Russian oil, but production hasn’t taken a dip – at least not yet. But some experts think Russia could have trouble extracting oil before long, with the exodus of international firms leaving the country without the technical know-how and up-to-date equipment to tap trickier reserves. That means Russia’s oil output could drop by as much as 20% by 2030.
The bigger picture: Long-haul hurt.
Russia's economy held up better than expected last year, sure, but the country’s stats don’t bode well for ordinary citizens’ confidence. Retail sales dropped for the tenth straight month in January, and increasing numbers of Russians are saving instead of spending. Plus, hundreds of thousands of citizens have already fled to avoid being conscripted. In short, even if the war ended tomorrow, it would probably still take years for Russia’s economy to recover.
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