Russia to gain billions in additional revenue from oil price surge due to war with Iran

Russia has been earning up to US$150 million a day in additional budget revenue from oil sales, becoming the biggest beneficiary of the conflict in the Middle East.

Source: Financial Times

Details: Estimates suggest Moscow has already received a windfall of between US$1.3 billion and US$1.9 billion from oil export taxes after the effective closure of the Strait of Hormuz drove up demand for Russian oil from India and China.

According to Financial Times calculations based on industry data and estimates from several analysts, Russia could receive a total of between US$3.3 billion and US$4.9 billion in additional revenue by the end of March.

These estimates assume that the price of Russia's Urals crude will average about US$70-80 a barrel this month rather than staying near the average level of the previous two months – around US$52 a barrel.

This changes the outlook for Moscow dramatically: before the war around Iran, the report says, Russia had been suffering due to falling oil prices and the loss of most of its sales to India, largely due to pressure from Washington.

Exports of Russian crude oil and oil products plummeted by 11.4% in February to 6.6 million barrels a day, the lowest level since the start of Russia's invasion of Ukraine in 2022, according to a report published on Thursday by the International Energy Agency (IEA).

Much now depends on how long the conflict in the Middle East lasts, but the current high prices "will help Russia to meet budget indicators this quarter and even start saving some money", according to Borys Dodonov, Head of the Energy and Climate Research Unit at the Kyiv School of Economics.

Background:

• IEA member countries have decided to release 400 million barrels of oil from strategic reserves amid reduced supplies from the Middle East.
• Brent crude is currently trading at US$99.79 per barrel.

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