Russia rakes in $150mn a day in extra revenue from surging oil prices

Russia is earning as much as $150mn a day in extra budget revenues from its oil sales, making it the biggest winner from the conflict in the Middle East. 

Moscow has so far earned an estimated $1.3bn-$1.9bn windfall from taxes on oil exports after the effective closure of the Strait of Hormuz led to rising demand for Russian crude from India and China. The US also eased its Russia sanctions and its pressure on India not to buy Russian oil, prompting a significant number of tankers to head to the Indian Ocean.

The Russian government could receive $3.3bn-$4.9bn in overall additional revenues by the end of March, according to FT calculations based on industry data and several analysts’ assessments. That is assuming Russia’s Urals crude prices average around $70-$80 a barrel this month instead of remaining at a level close to the previous two months’ average of $52 a barrel.

It marks a stark reversal in fortunes for Moscow, which before the Iran war had been struggling with falling oil prices and the loss of most of its sales to India, largely due to pressure from Washington.

Russian crude and oil product exports plunged 11.4 per cent to 6.6mn barrels a day in February, their lowest level since the 2022 invasion of Ukraine, according to an International Energy Agency report issued on Thursday.

Much now depended on how long the Middle East conflict will last, but the current high prices “will help Russia to meet budget indicators this quarter and even start saving some money”, said Borys Dodonov, head of energy and climate studies at the Kyiv School of Economics. 

The Iran war offers Russia a chance to tighten its grip on energy markets at the expense of Gulf states that are unable to export their products.

Moscow is hoping to seize the momentum. Russian President Vladimir Putin on Monday said energy markets were moving towards “a new pricing reality” and floated the idea of resuming energy exports to Europe.

A few hours later, the Kremlin announced a “very productive conversation” between Putin and US President Donald Trump, who later mentioned a possibility of “taking sanctions off” some unnamed countries to reduce prices “until this straightens out”.

The situation has caused alarm among US allies. A study by a major energy company warned that European governments would come under pressure to delay their upcoming ban on Russian LNG if the disruption to Middle Eastern supplies persisted, undoing years of efforts to isolate Moscow.

Shipment tracking data from Kpler showed that a “substantial amount” of Russian crude cargoes was currently at sea, much of it moving across the Indian Ocean towards Indian ports, the analytics firm said. Indian imports of Russian oil were running at 1.5mn b/d as of Wednesday, up 50 per cent from early last month, it added.

“If the current shipment schedules, market intelligence and cargo movements continue, total Russian crude arrivals for the full month could reach close to 2mn barrels per day,” said Sumit Ritolia, a lead Kpler analyst in New Delhi. 

“Russia is the big winner of this conflict,” he added.

The disruption to the Strait of Hormuz waterway has triggered chaos in global oil and gas markets, threatening to remove from the market about 60mn tonnes of crude oil and 7mn tonnes of LNG every month, according to Vaibhav Raghunandan, an EU-Russia analyst at the Centre for Research on Energy and Clean Air.

Attempting to make up for supplies lost from the Middle East, India’s and China’s imports from Russia rose 22 per cent each a week after the US and Israel began strikes on Iran compared with the daily average in February, added Raghunandan. “If the crisis drags on, they will be fighting each other over Russian oil,” said Sergey Vakulenko, a fellow at the Carnegie Russia Eurasia Center in Berlin.

Meanwhile, Russian oil stranded in tankers at sea has fallen by 11mn barrels to 125mn barrels at the start of the Middle East conflict, Kpler data shows.

Russian oil is now trading at around $20-$30 per barrel above its average in the previous three months. Analysts at Kpler believe that Russian crude is now being sold in India at around $5 per barrel more than Brent, reversing previous discounts.

Every $10 increase in the average monthly price per barrel of oil generates an additional $2.8bn in revenue for Russian oil exporters, of which the state received $1.63bn through taxation, said Vakulenko. Roughly calculated, that equates to $54mn extra a day in budget revenues.

It means the government might have received an extra $110mn-$160mn per day, or a total of $1.3bn-$1.9bn over the first 12 days of the war. At that pace, Russia would receive an additional $3.3bn-$5bn for the whole month towards the state coffers.

However, Moscow would need current market conditions to hold for several more months to make up for the drop in energy revenues at the start of the year.

Revenues from energy — now mainly represented by the mineral extraction tax on oil — fell almost 50 per cent year on year in the first two months of 2026, pushing Russia’s budget deficit to more than 90 per cent of the figure projected for the whole year. 

For the first time since 2022, the pressure began to take a real toll on Russia’s budget, prompting Moscow to consider spending cuts by at least 10 per cent in this year’s budget, according to Reuters.

Russian government officials were worried about how to handle the April deficit a couple of weeks ago, but now they were confident they would get through it, a person familiar with their planning said.

Analysts believe that in the case of a prolonged crisis, Russia has the option and capacity to increase production, which it is currently keeping to 300,000 b/d below the Opec+ quota.

“We believe that Russia has at least 400,000 barrels per day of production capacity available on a relatively short-term basis, but it might take several months to bring this volume online,” said Ronald Smith, founder of Emerging Markets Oil and Gas Consulting Partners.

Whether they can do that will depend on factors beyond Moscow’s control.

“How far, and for how long the US is prepared to ease its strict sanctions on Russian oil exports remains unclear,” said Michael Moynihan, research director for Russia at Wood Mackenzie, “particularly while the war in Ukraine continues.”