KSE Institute has published the April edition of its Russia Chartbook, “Oil Export Revenues Surge due to Iran War; Revenues Set to Improve but Budget Situation Would Only Normalize with Long Conflict.” The latest data show a sharp jump in Russia’s oil revenues driven by the Iran war – but a record budget deficit, pressure on reserves, and a slowing economy remain in? the broader picture.

Russia received a major boost in March as oil export earnings nearly doubled to $19.0 billion, up from $9.8 billion in February and the highest figure since fall 2023. The jump was driven almost entirely by price: Russian oil recovered to $78.4 per barrel – a ~65% increase from $47.4 in February – as the Iran war drove up global prices, though the discount remained elevated at $25.4 per barrel. Volumes rose only modestly, by 3% to 7.1 mb/d. Partial US sanctions relief opens the door to further increases, including through stepped-up purchases by India. Even if the conflict proves relatively short, Russia will retain elevated oil export earnings until markets stabilize.

The budget deficit widened further, but relief is on the horizon. The cumulative deficit over January–March reached a record 4.6 trillion rubles (~$59 billion), already exceeding the full-year target by 21%. Oil and gas revenues fell 45% year-over-year in Q1. To cover the gap, Russia withdrew 460 billion rubles from the NWF by selling gold and yuan-denominated assets, while the Ministry of Finance issued 1.4 trillion rubles in OFZs in Q1, up 25% compared to Q1 2025. Federal government debt has doubled since the start of the full-scale war, reaching 31 trillion rubles. In April–May, Russia will receive considerable budget relief as higher energy prices feed through to oil and gas tax revenues with a one-month lag.

Russia’s macroeconomic buffers are under pressure. International reserves fell from a peak of $827 billion in late January to $780 billion in mid-April, while NWF liquid assets declined from $56 billion in January to $48 billion in March. This decline is driven primarily by falling gold prices, which had also been the main factor behind the earlier increase in reserves from $643 billion before the full-scale invasion. The immobilization of more than $300 billion in central bank reserves overseas due to sanctions remains a separate and significant constraint.

Russia’s war-driven growth has come to an end. Rosstat reports real GDP growth of just 1% in 2025 – a marked slowdown from 4%+ in 2023 and 2024. While war-related sectors continue to expand, the civilian economy is contracting under the pressure of high borrowing costs, labour shortages, and sanctions. Most forecasters expect growth of around 1% or below in 2026 and 2027, and Russian authorities themselves reported that the economy shrank by 1.8% in January-February. The Iran war may offer some relief, but leaves none of Russia’s underlying structural problems resolved.