Page 20 - RusRPTFeb23

believes.
On the same day the world's largest oil company, Saudi Aramco, released its outlook for 2023. It also hopes for a Chinese recovery and predicts additional demand for jet fuel, pointing to a shortage of new production of 4-6mn b/d.
After the IEA’s forecasts of record demand, the price of Brent rose above $87 - the level of early December – before falling back to $85 by the close of trading.
For Russia the price of Brent is critical for the budget. The introduction of the crude embargo has already seen the Russian budget revenues
tumble in December to end the
year with a 2.3% of GDP deficit, almost all of which was due to a collapse in Urals oil prices in December. For 2023, the government is now forecasting that the deficit will increase from around 2% to 3% as a result of the changes in
oil and gas revenues expected this year.
Currently it’s not unclear how the price of Urals will be affected by the new sanctions after February 5, but it is obvious that Russia cannot replace Europe with new customers for all oil products it currently exports there. Russia will have to reduce both refining and oil production as a result. Domestic experts consider $40 per barrel as the level that will cause server problems for the budget and in December-January, Russian oil already approached this level. However, Russia’s budget revenues may be rescued by the inflection in demand in the second half of the year that could push oil prices up sharply.
2.8 Most big western companies still working in Russia
The vast majority of western companies that promised to pull out of Russia after the start of the war in Ukraine are still there, according to study by professor Simon Evenett, from the University of St. Gallen, and professor Niccolò Pisani, from the International Institute for Management Development.
As previously reported by bne IntelliNews, less than 5% of German companies have decided to leave Russia, a fact confirmed by the new study that reports the “vast majority” of European firms still in Russia are German.
German firms are disproportionately represented in Russia, with over 10,000 registered German subsidiaries operating in Russia before the way – at least ten times the number of firms registered by other European companies.
Of two-thirds of the Russian-German Chamber of Commerce surveyed last summer on their intensions, only 4% announced they were leaving the Russian market completely. The rest plan to continue, RBC was told by the Russian-German Foreign Trade Chamber (VTP) at the time.
The new study found less than 9% of about 1,400 EU and G7 companies that had subsidiaries in Russia before Moscow invaded Ukraine had divested at least one subsidiary in the country by November 2022.
20 RUSSIA Country Report February 2023 www.intellinews.com