Russia forced to raise household gas prices to boost revenues

UK Defence Intelligence has analysed the situation regarding gas prices in Russia and their rise since Russia's full-scale invasion of Ukraine.

Source: UK Defence Intelligence review dated 15 July, as reported by European Pravda

Details: Russia has increased domestic gas prices by 11.2% since 1 July, almost certainly in order to increase revenues from the Russian domestic market in view of the loss of the European market.

The increase was a result of sanctions imposed on Russia for its invasion of Ukraine, as well as a deliberate reduction in gas supplies to Europe in response, UK intelligence adds.

UK Defence Intelligence noted that Gazprom, the Russian state-owned energy giant, experienced a net annual loss of approximately US$6.9 billion in 2023, marking the company's largest annual loss in 25 years.

The review says that inflation in Russia is likely to remain above the Central Bank of Russia's 4% target in the second half of 2024. This is partly due to rising domestic gas prices and other household expenditures, as well as increased government spending, mainly driven by Russia's invasion of Ukraine.

"Gas prices for Russian households are estimated to have increased by nearly 34 per cent since the start of the invasion, despite Russia being the world's second largest producer of natural gas in 2023. These are due to rise a further 8.2 per cent in 2025, which will almost certainly add to inflationary pressures in Russia's economy and weaken spending power for ordinary Russians," UK intelligence stated.

Background:

• In one of its previous reviews, UK Defence Intelligence reported that Russia's average daily losses (i.e. killed and wounded in action) in May and June 2024 had risen to the highest level since the start of its war of aggression against Ukraine.
• UK Defence Intelligence also stated that Ukraine's frequency and effectiveness of strikes against Russia's Black Sea Fleet had increased significantly over the past year.

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