Putin’s cash flood from from exports slows amid curbs on oil and gas

Russia had its smallest current-account surplus in more than a year as new restrictions on its oil exports endanger what’s become a critical source of hard currency for the Kremlin since the invasion of Ukraine.

The surplus in the current account — roughly the difference between exports and imports — decreased to $31.4 billion in the fourth quarter, down from $48 billion in the previous three months, according to preliminary central bank data published on Tuesday.

For the full year, the surplus fell short of the central bank’s latest forecast. It reached a record $227.4 billion, as cash from exports of oil, gas and other commodities flooded in while imports remained depressed by sanctions.

What Bloomberg Economics Says...

“Declines in global energy prices, exacerbated by an increase in the discount for Russia’s Urals, has erased $20 billion of export revenue. The balance is set to weaken further this year, challenging efforts by authorities to stabilize the ruble and inflation.” —Alexander Isakov, Russia economist. 

By imposing sanctions including import bans and a price cap on seaborne Russian oil shipments, Western countries are now aiming to reduce the flow of petrodollars to the Kremlin. Russia has also been cutting its gas supplies to Europe.

The price for Russia’s oil, Urals crude, more than halved from its peak of 100 per barrel in March.

“Current account surpluses in the second and third quarter were significantly higher than we had anticipated but the balance is now declining faster than we had initially thought,” Goldman Sachs Group Inc. economists including Clemens Grafe said in a report before the data release.