Russia’s Oil Revenues Halved in March Before Iran War Boost

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(Bloomberg) — Russia’s oil tax revenue in March dropped by nearly half compared to a year earlier, highlighting the Kremlin’s financial strain just before the Middle East war delivered an unexpected boost to Moscow’s earnings.

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Russian producers paid 494.9 billion rubles ($6.18 billion) in oil taxes last month, down 48% year on year, according to Bloomberg calculations based on Finance Ministry data released Friday. Combined oil and gas revenues in the federal budget fell nearly 43% from a year earlier to 617 billion rubles.

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The decline reflects how March taxes were calculated using February prices for Urals, Russia’s main export blend. At the time, Urals averaged below $45 per barrel, according to government data, well under the $59 per barrel assumed in the country’s 2026 budget. Prices were pressured as the remaining buyers of Russian oil demanded steep discounts amid ongoing energy sanctions. A stronger ruble also contributed to the plunge.

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Falling tax revenues from the oil and gas sector have widened Russia’s budget deficit, as economic growth stalls and spending on the war in Ukraine continues to drain resources.

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As soon as next month, however, Russia’s budget is set for a significant spike in oil and gas revenues, after Urals prices surged in March amid the Middle East conflict. By the end of the month, Urals crude delivered to India, one of Russia’s key buyers, was trading above $120 per barrel, at a premium to the Brent benchmark.

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The war in Iran has all but shut the Strait of Hormuz, a key route for energy exports from Gulf nations. Russian oil doesn’t rely on this passage, making it more attractive to buyers in Asia.

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At the same time, in an effort to contain rising oil prices, the US has allowed a broad group of countries, including India, to purchase large volumes of Russian crude already at sea. The waiver has further boosted Asian demand for Russian barrels.

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Thanks to the sharp turnaround in oil prices, Moscow no longer plans any substantial cuts to budget spending and may even increase defense outlays if the war in Ukraine drags on, according to people familiar with the plans. 

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Still, President Vladimir Putin has on several occasions urged his government and the nation’s oil producers to take a moderate approach to spending since the high oil prices may be temporary.

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Russia’s oil and gas revenues in March were calculated using a Urals price of $44.59 per barrel, down from $61.69 a year earlier. The exchange rate was set at 76.85 rubles per dollar, compared with 92.9 rubles per dollar in March 2025, meaning the budget earned fewer rubles for each barrel produced and sold.

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March oil revenues rose to a five-month high, driven by Russia’s oil tax payment schedule, under which the profit-based tax is largely paid four times a year — in March, April, July and October.

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