Russia rakes in nearly $20bn from oil exports in May | Oil

Russia raked in around $20bn (£16.6bn) from oil exports in May, as revenues bounced back to prewar levels in a setback to western efforts to choke off its economy following its invasion of Ukraine.

Yields from shipping crude and oil products rose 11% from a month earlier despite a 3% fall in exports, according to the International Energy Agency’s monthly report.

Western nations have imposed sanctions on Russian oil and gas – the Kremlin’s largest source of revenues.The US banned Russian fuel imports, while the UK and the EU have agreed to phase out their use.

However, Asian countries like India and China have increased their imports from Russian fuel due to record-breaking discounts of over 30% on Brent crude.

Russia has been able deal with the rise in Brent crude’s price. Urals, Russia’s main export blend, averaged $78.81 a barrel in May, up almost 12% from a month before.

Oil prices are at $121 per barrel, up 70% in the past year. The price fell this week due to fears that the US Federal Reserve would surprise markets with a higher than expected interest rate hike.

The US government seems poised to follow Rishi Sunak’s lead and impose a windfall tax for excessive oil company profits.

Goldman Sachs saidLast week, oil prices could rise to $140 in the summer, causing more pain at the pumps. Due to a weaker pound and a squeeze in refining capacity, the UK is facing record petrol and diesel costs.

The price of wholesale gas is also increasing due to an extended outage at Freeport liquefied gas (LNG), following a fire at the US facility. Also, supply worries are heightened by the curtailment via the Russian Nord Stream 1 pipe.

The gas contract for within-day delivery in the UK rose by 10p to 180p per therm and the day-ahead contract jumped by 14p to 180p a therm – a two-month high for both contracts. UK gas contracts for delivery in July are up about 25% to £1.97 per therm.

Freeport LNG saidTuesday’s announcement by the Texas Gulf Coast Plant after the explosion last week meant that repairs could be completed until the end the year. Some operations would resume in 90 days.

Russia was the catalyst for Europe’s supply problems. saidIt would reduce capacity on the massive Nord Stream 1 pipe to Germany by 40%. Moscow has retaliated after delays to the return of gas turbines to Russia’s Gazprom that Siemens Energy saidAfter maintenance in Montreal, Canadian sanctions had blocked the access to the property.

Analysts at Jefferies warned issues at Shell’s Prelude liquefied natural gas facility off Western Australian could also hit volumes. Workers began weeks of strike action last week and an investigation by regulators into the site’s smoke detectors may also impact supply.

Last week, the head of the International Energy Agency, Fatih Birol, labelled the failure by governments and businesses to accelerate energy efficiency efforts as “inexplicable”.