The Gamble on Crude: Unpacking the Connection Between Russia’s Oil Production, Prices, and Budget Revenues

The Russian economy is heavily dependent on the income from the oil and gas industry and is an important source of budget financing. From the mid-1990s to early 2020, oil production has continuously grown, but after the Covid-19 pandemic and the OPEC+ decision to reduce production, production fell from 1.55 million tons per day to 1.3-1.4 million tons.

During the period of 2021-2023, a slow recovery of production to 1.4-1.5 million tons per day was observed and adaptation to new export conditions.

Federal budget revenues from the oil and gas sector reached a maximum in the period 2011-2014, approximately 500-600 million dollars per day. Since 2015, due to the large volatility of oil prices and the exchange rate of the dollar, budget revenues from oil have been in the range of 200-400 million dollars per day.

Assessment of the dynamics of oil production and budget revenues showed a weak relationship between these indicators. However, a strong statistically significant dependence between the price of Urals oil and budget revenues is observed.