Alfa-Bank: Russia lost $3B in revenue from sales of Urals in March

Russia lost $3 billion of its revenues from oil sales in March when the Urals price was at a discount to Brent, Report informs referring to Russian media.

The strengthening of the ruble observed in the Russian market looks temporary against the backdrop of a fall in Russia’s revenues from oil exports.

Economists at Alfa-Bank believe that the market was upbeat about the recent rise in the ruble exchange rate to 80-85 rubles/$1.

“We consider this movement of the exchange rate to be very unstable and associate it with the period of tax payments, which was traditionally characterized by increased sales of export earnings. At the same time, the Ministry of Finance announced that in March, the Russian oil was sold at a 20% discount to the price of Brent crude oil, which means a loss of the country's export income at the level of $3 billion per month," the bank's review reads.

The decline in physical volumes of exports of oil and metals is likely to lead to additional losses in the coming months. Out of $45 billion in monthly export earnings in January 2022, Russia may receive only $30 billion monthly in the coming months, especially if oil sales from US strategic reserves lead to lower oil prices, bank analysts say.

They also expect that Russian companies will have to heavily overpay for the transportation of goods when importing, as a result of which, even with a decrease in physical volumes of imports in March by 50-60% from the level of February, in nominal terms, imports may remain at the pre-crisis $25 billion per month.

The Russian Ministry of Finance estimated the deviation of actually received oil and gas revenues from the expected volume in March at minus 302 billion rubles (about $3.5 billion).