Strong rouble eats into Russia's oil profits despite rising global prices

Oil prices are rising, but Russia is not profiting from this as expected: the Kremlin’s revenues remain under pressure as the rouble strengthens.

Source: Bloomberg

Details: On 13 June, Urals oil rose to over $60 per barrel, almost regaining its losses since the start of the year. Bloomberg estimates, however, that the real income earned by Russian exporters was RUB 4,957 (US$63) per barrel, almost 30% lower than at the beginning of 2025.

The reason for the plunge in revenue is the strengthening of the rouble, which has climbed almost 23% to 78.72 to the dollar. This is due to a combination of factors: the high key rate set by the Russian Central Bank and the anticipation of a "thaw" in relations with the United States.

As a result, the situation remains challenging for the Kremlin. Oil and gas revenues account for up to a third of the budget, and most expenditure is made in roubles. Although some losses are offset by government subsidies, export profitability is declining.

"A strong currency makes life more difficult for the industry," said Russian Deputy Prime Minister Alexander Novak. Igor Sechin, CEO of Rosneft, Russia’s biggest oil producer and exporter, has accused the Central Bank of "understating the value of oil in roubles".

Analysts at Freedom Finance Global believe that a return to a weak rouble is unlikely while commodity prices and interest rates remain high. Only a fall in global oil prices and a surge in inflation could change the current trajectory.

Background:

• Russia has been unable to take advantage of the recent rise in oil prices and the increase in its own OPEC+ quota as export volumes fell to their lowest level in seven weeks.
• In May 2025, Russia's export revenues from the sale of hydrocarbons abroad fell to their lowest level since the start of the full-scale war against Ukraine.

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