Russia’s average daily revenues from oil exports have doubled in recent weeks, rising from $135 million to $270 million. Meanwhile, shipments have reached their highest level since the invasion of Ukraine, Bloomberg reports. The increase is driven by higher global oil prices amid uncertainty related to the war in the Middle East and the closure of the Strait of Hormuz.
Over the past four weeks (ending March 22), Russian exporters shipped 3.6 million barrels per day, and from March 16 to 22 alone, 37 tankers moved 28.5 million barrels of Russian oil. Since deliveries to India resumed, Russia has been exporting 1.4 million barrels a day to the country.
As economist Vladislav Inozemtsev of the Center for Analysis and Strategies in Europe told The Insider, if current oil prices persist until the summer, Moscow may avoid running a federal budget deficit. However, Russia is still highly unlikely to salvage its struggling economy.
“Russia is benefiting from this war in every respect. While the average oil export price in February was $41.5 per barrel, on certain days in March it exceeded $100. Admittedly, contracts are concluded with a certain delay, and what was sold in March will be shipped and paid for in April. But I believe in March we will likely see a 60% increase in oil exports in dollar terms — and a 90% increase in April, compared to February.
The surge will bring substantial revenue to the budget, which already received about 400 billion rubles, or roughly $4.7 billion, in oil and gas revenues in February. I have no doubt that the new deals will add at least another $3–4 billion.
If these prices persist until June, the budget adopted last year will be balanced — or perhaps even in a better state than planned. There will be no excessive deficit. In addition to rising oil prices, a weaker ruble will also contribute.
The question is whether this will affect the Russian economy. I would say not. True, revenues will increase, but they will all be used to cover the deficit instead of bringing about any significant improvement. There will be no tax relief or reductions. All of the extra money will go toward balancing the budget, and whatever is left will be directed to the war. The situation is similar to that of 2023, when the budget saw significant additional revenues, but they were all allocated to the military by the end of the year. We will likely see the same outcome again. The surplus will help the budget, but not the economy.”
For his part, Vladimir Putin said on March 23 that oil companies should use the windfall revenues from high oil prices to repay debts: “Russian oil and gas companies should consider directing additional income from rising global hydrocarbon prices toward reducing their debt burden and repaying obligations to domestic banks.” The central bank supported the idea, commenting that “this is indeed a very reasonable approach in the current situation.”
Meanwhile, according to economist Ruben Enikolopov of Pompeu Fabra University, oil prices would need to remain above $100 per barrel in order to close the gap in the Russian budget.
“Naturally, rising prices will help the budget. The question is how large that money is compared to the budget gap. If prices remain above $100 per barrel, that would be good news for the Russian budget. I am not sure this will help the Russian economy, because it has significant problems — even Putin has acknowledged an economic contraction. Oil money cannot plug this gap. This is a very important factor, and the question is how long such prices will last. The [Iran] conflict is unpredictable, as there is no logic to it.”
