The Russian government said it's expecting to see billions of dollars of revenue from oil and gas using even a conservative estimate for global commodity prices. File Photo by Kremlin Pool/UPI | License Photo
Oct. 24 (UPI) -- Russia's finance minister said he's expecting a substantial amount of revenue from oil and natural gas sales even using a conservative estimate for energy prices.
Crude oil and natural gas prices are on the decline amid concerns about a global recession. Brent crude oil, the global benchmark for the price of oil, traded as high as $120 per barrel this year in response to supply-side concerns stemming from the war in Ukraine.
Brent by Monday was trading closer to $91 per barrel. Global policymakers are trying to arrest runaway inflation by raising the cost of borrowing. Their efforts may be so aggressive that they briefly halt any global economic growth and usher in a worldwide recession that would create headwinds for the price of oil.
Russian Finance Minister Anton Siluanov was quoted Sunday by Russian news agency TASS saying the government is expected to take in about $180 billion in oil and gas revenues, assuming the price of oil is above $70 per barrel.
He added that market conditions, meanwhile, are challenging for both buyers and sellers.
For buyers, a strong U.S. dollar is making it more expensive for nations that don't peg their currency to the greenback to purchase crude oil. For sellers, economic malaise could lead to a steady decline in global demand.
Economists at the Organization of the Petroleum Exporting Countries estimated in their monthly market report for October that the global appetite for crude oil was on pace to increase by 2.64 million barrels per day for 2022, lower than its September forecast for 3.1 million bpd in demand growth.
The supply-side challenges are particularly acute for Russia given the Western pressure on its economic lifeline, namely oil and gas exports. By December, members of the European Union will start to draw down their purchases of waterborne crude oil from Russia as punishment for its actions in Ukraine.
Russia is expected to take a severe economic hit this year. OPEC economists estimate the economy will shrink by 5.7% this year and only manage a meager 0.2% expansion in 2023.
Among non-OPEC members, meanwhile, Russia is one of the few global producers expecting any major declines in output going forward.