Russian budget surplus nearly evaporated in August amid energy war with Europe

Breanne Deppisch

September 12, 06:10 PM September 12, 06:10 PM

Russia’s budget surplus shrank sharply in August, according to new data from the central bank, due in large part to a drop-off in energy production and Western sanctions that have cut deep into its revenues.

According to preliminary figures released by Russia’s finance ministry on Monday, the country’s budget surplus narrowed to around $2.3 billion in August, less than half of the roughly $8 billion reported from January to July.

Oil and gas revenues, which made up roughly half of Moscow’s total budget revenues so far in 2022, were also down 18% compared to the same period last year, according to the data.

The news comes as Russian state-owned gas giant Gazprom has suspended nearly all of its gas deliveries to Europe, which are currently down to just one-fifth of preinvasion levels.

Russia said last week that it would not resume natural gas flow to the European Union until sanctions are lifted, all but acknowledging that Russia is intentionally inflicting an energy crisis on Europe as a means of countering Western economic punishment for Russia's invasion of Ukraine.

RUSSIA MAKES CLEAR IT IS STARVING EUROPE OF GAS IN BID TO GET SANCTIONS LIFTED

And though Gazprom has sought to offset its losses in part by starting production of liquefied natural gas for the first time earlier this month, the decline in piped gas has not been without consequence. In August, Gazprom said its production had declined by 15% this year compared to the first eight months of 2021.

Russia has also been forced to reroute its crude oil shipments, selling to Asian buyers, including China and India, at a discount.

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An EU ban on seaborne imports of Russian crude is slated to take effect in early December.