Russia "Making a Fortune" Under Middle East Conflict? Oil and Gas Revenue Expected to Surge 70%

As the U.S.-Israel attack on Iran at the end of February ignited Middle East conflicts, international oil prices have surged significantly from below $70 per barrel to around $100. At the same time, global natural gas prices have also risen sharply. This scene has undoubtedly made Russia’s energy exports one of the winners behind the scenes.

According to industry estimates based on a tax oil price of $75 per barrel, Russia’s budget oil and gas revenue for April is expected to increase by 70% compared to March, reaching 900 billion rubles, the highest monthly level since October 2025.

Sources familiar with the matter told media that the surge in oil prices triggered by the Iran conflict could significantly ease Russia’s short-term fiscal pressure and is also allowing the Russian government to delay implementing a plan aimed at increasing long-term fiscal reserves.

Before the Middle East conflict erupted, Russia had attempted to channel more oil revenue into the national reserve fund and announced plans to lower the so-called critical oil price. Currently, any oil revenue exceeding the current critical price of $59 will flow into Russia’s fiscal reserves—the National Wealth Fund.

However, sources say that as short-term fiscal pressures ease significantly, the Russian government is now postponing the adjustment of the above “critical price.” One source indicated that since adjustments require legal revisions to the budget law, this change is more likely to be implemented in 2027.

Russia’s fiscal budget is calculated based on an average annual oil price that is aligned with the critical price. If the monthly average oil price falls below this level, the resulting deficit will be covered by the reserve fund; if it exceeds the critical price, the excess revenue will be transferred into the fund.

The Russian government is set to release a new macroeconomic forecast in April, which will include the expected average oil price for this year, serving as an important basis for budget planning.

However, Russian Central Bank Governor Nabiullina stated last week after a rate cut that it is still too early to judge the impact of rising oil prices on the Russian economy. At a press conference, Nabiullina and First Deputy Governor Zablotkin said that the budget rules are the best safeguard for Russia against external shocks.

An individual familiar with ongoing discussions said that even if the Iran crisis suddenly ends, most Russian decision-makers still expect oil prices to retain risk premiums for some time.

During a meeting on economic issues this Monday, Russian President Vladimir Putin pointed out that Russia’s inflation rate has now stabilized below 6%, and Russian oil and gas companies should use the additional income from energy exports to pay down debt. Putin also called for balanced decisions on how to use the revenue generated from rising oil prices.

(Source: Cailian Press)