Russian oil producers’ profits dived in the first half of the year, driven down by lower crude prices and a stronger ruble.
Rosneft PJSC, the state-controlled giant accounting for more than a third of Russia’s total oil production, reported 245 billion rubles ($3 billion) of net income in the first six months of the year, down by over 68% from the same period in 2024, the producer said in a statement on Saturday.
“The first half of this year was characterized by lower oil prices, primarily due to the overproduction of oil,” Rosneft Chief Executive Officer Igor Sechin said in the statement. “In addition, there was an expansion of discounts on Russian oil due to the tightening of EU and US sanctions restrictions and a significant strengthening of the ruble exchange rate, which negatively affected the financial results of all exporters.”
The slump follows weaker results from Rosneft’s Russian peers. Earlier in the week, Lukoil PJSC, the nation’s second-largest oil producer, and Gazprom Neft PJSC, the oil arm of the nation’s gas giant Gazprom, both reported a more than 50% year-on-year slide in their first-half profit. Smaller rival Tatneft PJSC saw a 62% drop.
Lower global crude prices undermined profits for oil majors across the world in the first half of the year amid fears of a global glut. OPEC+ is returning curtailed supply to the market faster than expected, while US President Donald Trump’s tariff policy threatens to slow the global economy.
It’s unclear how much of the slide in profit was down to western sanctions and restrictions on Russia, which were imposed in response to the war in Ukraine to cut the Kremlin’s access to funds for the conflict.
Urals, Russia’s key export blend, averaged $58 a barrel in the first half of this year, down by over 13% from a year ago, according to Bloomberg calculations based on Argus Media data.
At the same time, the ruble appreciated by almost 23% to 78.4685 per US dollar as of June 30 from the end of last year, as Russia’s key interest rate remained near a record high. The strengthening meant Russian producers received fewer rubles for each barrel pumped and sold.
While the Russian central bank reduced borrowing costs by a total of 300 basis points over meetings in June and July, the pace of the cuts is “clearly insufficient,” Sechin said.
“One of the consequences of maintaining the key interest rate at an elevated level for a long time is the excessive appreciation of the ruble, which leads to losses for both the Russian budget and exporting companies,” he said. It also leads to an increase in debt-servicing costs, worsening the financial stability of corporate borrowers and undermining investment potential, he added.
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