Russia’s Oil Dependency Fuels Conflict Amid Sanctions

The Russia’s federal budget heavily relies on oil and gas sales, accounting for a significant one-third of its overall revenues. With economic projections anchored to an assumed oil price of around $70 per barrel, the fiscal strategy developed by Minister of Finance Anton Siluanov implies the adoption of a conservative estimate of $60 per barrel. A strategic move lies beneath this cautious approach: the surplus amassed from circumventing sanctions against Russia boosts the National Wealth Fund. This fund does not just accumulate wealth; it boosts capabilities of Russia to wage the war against Ukraine, funding the brutal actions of Russian forces against Ukrainian civilians.

Data from the Russian Ministry of Finance reveals a 4.8% year-on-year surge in federal budget income, reaching substantial 25.96 trillion rubles ($280 billion) from January to November 2023. Meanwhile, non-oil revenues have surged by 25.6%, hitting 17.7 trillion rubles ($190 billion). However, oil and gas revenues have nosedived by 22.8%, dwindling to 8.2 trillion rubles ($0.9 billion). This glaring contrast highlights Russia’s volatile reliance on hydrocarbon exports, especially amidst global condemnation and sanctions.

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