Staggering Russian Economic Fall due to Oil and Gas
The news of Russia's economic woes is no surprise to many analysts, who have warned for some time that the country was headed for a crash. With its oil sales falling and its revenue forecasts slashed by $130 billion, it seems that Russia is indeed in the midst of an economic collapse.
The Russian central bank has been forced to step in and devalue the ruble in an attempt to stop the bleeding, but it is unclear whether or not this will be enough to save the Russian economy. This will make Russian exports more competitive on the global market and may help revive the Russian economy in the long run.
Many economists predict that Russia will experience a full-blown recession in the coming years, and its economy will continue to decline until it reaches a point of complete collapse. The reasons for this are largely structural, as Russia has failed to diversify its economy away from oil and gas exports.
surprises
In 2015, Russian oil and gas exports accounted for 68% of the country's total export revenue. By 2017, that figure had fallen to 63%. In 2023, it is expected to fall even further to 60%. This decline is a direct result of the fall in global oil prices, which has hit Russia hard.
The graph below shows Russian oil exports from January 2022 to August 2022. There has been a steady decline in exports, with the most significant drop taking place in July.
It is predicted that Russian oil exports will continue to decline in the coming years as the country's economy collapses. This will have a negative impact on Russia's export revenue, which is already in decline. Russian oil exports will decline even further in 2023 due to the fall in global oil prices.
Russian GDP 2022
According to the World Bank, the Russian GDP is expected to 4-6% decline by the end of 2022. This decline will be driven by continued relapse in the oil and gas sector, as well as lower investment and higher consumption. The Russian economy is projected to drop 1-4% in 2023 and 1.5-2.5% in 2024. These forecasts are based on the assumption that oil prices will remain at around $50 per barrel.
As the world progresses, countries are finding new energy sources to fuel their economies. The once-powerful Russian economy is now on the decline due to its dependence on oil. In fact, by 2022, Russia's economy is expected to fall by 3%.
This is a direct result of Putin's inability to insure oil tankers and the lack of oil storage facilities. Without an income, Russia can't afford to keep its oil platforms operational. India and China are also buying Putin's oil, but they have cheaper alternatives available. As a result, a price cap will be added to Russian oil, lowering its profit.
Putin announced a price cap on Russian oil to compensate for the lost revenue. This will lower its profit margin, making it less attractive to potential buyers. Additionally, the high fixed costs of oil platforms mean Russia cannot keep them operational without an income.
To make matters worse, Russia doesn't have enough storage facilities to stockpile its oil. As a result, the country's economy is expected to continue to decline in the coming years.
Let’s talk about Gas now!
Putin’s Strategic Approaches For Gas In Europe
Russian gas revenues have collapsed as Putin has asked Turkey to become a hub to sell Russian gas to Europe. This could seriously impact the Russian economy, as gas revenues account for a significant portion of its income. In 2022, Putin is asking Turkey to become a hub to sell Russian gas to Europe to offset revenues' collapse. However, it's unclear whether Turkey will agree to this proposal.
If the latter agrees to become a hub to sell Russian gas to Europe, this could help offset the collapse in Russian gas revenues.
Secondary Sanctions And Russian Gas Revenues 2022
In 2022, Russian gas revenues are estimated to be $33.4 billion. This is a decrease from the $37.8 billion generated in 2016. The main reason for this decline is the introduction of secondary sanctions by the United States in late 2017. These sanctions have made it more difficult for Russian companies to do business in the United States, and as a result, their gas sales have declined.
In response to these sanctions, Russia has been working to increase its gas exports to other countries. In particular, Russia has been working to increase its gas exports to China. In 2017, Russia and China signed a $400 billion deal that will see Russia supply China with gas for the next 30 years. This deal is expected to generate $25 billion per year for Russia, which will help to offset the loss of revenue from the United States.
Despite the decline in gas revenues, Russia is still expected to be one of the world's leading gas producers in 2022. In fact, Russia is projected to produce more gas than any other country in the world except for Iran. This is because Russia has the world's largest reserves of natural gas. As a result, Russia is expected to remain a major player in the global gas market for the foreseeable future.
