Russia's oil earnings fall despite price jump as output drops, rouble rises

Russia's Oil Earnings Decline in 2025 Despite Rising Prices, Output Drop and Rouble Strength

Analysis of Russia's Energy Revenue Trends in 2025

(Corrects the second paragraph to show that the decline was from 6.61 trillion roubles in the first nine months of the year in 2025, not 6.01 trillion)

Oct 5 (Reuters) - Russia's energy revenue is down 17% this year despite its crude price hitting more than decade highs as the Ukraine war disrupts output and exports and a stronger rouble also bites.

Tax proceeds related to oil and natural gas production in the first nine months of the year declined to 5.47 trillion roubles ($64.43 billion) from 6.61 trillion a year earlier, finance ministry data showed on Monday.

The sector accounts for about 20% of the tax proceeds that go towards Russia's budget, which is currently expected to run a 2026 deficit of 3% of gross domestic product, almost double the plan.

Oil Price Developments

Urals Oil Price Surge

PRICES HAVE DOUBLED

Russia's flagship Urals oil traded at more than $92 at end-September, according to LSEG data, double its price before the Iran war and a Western price cap of $44.10.

Urals sold on a free-on-board basis shipped from the Baltic Sea of Primorsk at around $45 per barrel before the conflict started on February 28.

A high of $113.89 on April 8 was its highest since 2013, LSEG data showed, reflecting a rally in spot markets amid Middle East supply disruptions.

Impact of Black Sea Port Loadings

Another factor supporting Urals prices are a drop in loadings at the Black Sea port of Novorossiysk last month. Traders said the port is still shipping oil below capacity due to high security risks after a series of Ukrainian attacks and a lack of tankers.

Crude Production and Export Outlook

Output Decline to 17-Year Low

CRUDE PRODUCTION OUTLOOK CUT TO 17-YEAR LOW

Offsetting the price rise, however, is a fall in output. Russia last month lowered its outlook for crude oil and natural gas production and exports this year, confirming earlier Reuters source-based reports. Its revised outlook for oil production this year marks a 17-year low.

The industry has suffered from constant Ukrainian drone attacks on oil refineries, forcing plants to lower cut back production and triggering shortages across Russia's 11 time zones.

Monthly Production Figures

Crude oil production in August fell by more than 5.6% to 8.718 million barrels per day, according to the Organization of the Petroleum Exporting Countries, down from a January figure of 9.240 million bpd.

Currency Movements and Their Impact

Rouble Strength and Revenue Implications

HIT FROM CURRENCY MOVEMENTS

Currency movements are also impacting Russia's rouble-denominated revenue. In January to August the rouble was on average around 9% stronger versus the dollar than it was in the same period in 2025.

As a result, the average January-August Russian oil price used for taxation increased to $66.70 per barrel from $59.12 a year earlier, a much smaller rise than in its dollar price, government data showed.

($1 = 84.8996 roubles)

(Reporting by Reuters; editing by Jason Neely)