Steep And Slippery

Image source: Midjourney AI

What's going on?

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 nations slippery elixir. And those sanctions are hitting Mother Russia where it hurts: the nations 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 countrys coffers, and now Februarys 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 hasnt 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 Russias 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 countrys stats dont 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 Russias economy to recover.

Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over one million Finimizers

Read next

Plane And Simple

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.