According to Bloomberg Economics, Russia’s oil and gas revenues have recovered from recent lows and are preparing to resume foreign currency purchases as soon as this month.
The country’s revenues from energy exports have been hit by Western sanctions and a ban on oil and fuel exports to the European Union, but this is starting to change, with revenues set by the government, according to Bloomberg Economics data. You are about to exceed your target level. .
As a result, the Treasury Department is expected to announce the resumption of foreign currency purchases that were halted last year following the invasion of Ukraine and the Western response to it.
“It will be important for the market that countries are starting to stockpile reserves again instead of spending them,” Freedom Holding analyst Natalia Mirtyakova told Bloomberg.
Part of the reason for the rebound in oil revenues is a change in the oil industry tax formula that took effect earlier this year. The formula is based on flagship Ural’s officially set discount to Brent crude, which was set at $34 a barrel last month. However, the future base will see a smaller discount to Brent, reaching $25 a barrel in July, according to Bloomberg.
According to the Russian Ministry of Finance, the change in formula could add another $7.46 billion (600 billion rubles) to the federal budget.
As a result, the Russian government is likely to start buying foreign currencies again for its sovereign wealth funds, with analysts expecting purchases to begin in June and focus on the Chinese yuan.
Previously, Russia used sovereign wealth funds to fill budget gaps left by sanctions-induced slowdowns in oil and gas spending. These are down 45% year-over-year in the first quarter of 2023.
By Irina Slav for Oilpriec.com
Read more Oilprice.com article:
