‘Pocketing billions’: How the Iran war has thrown Putin an oily lifeline

March 31, 2026 — 3:44pm

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Washington: As Australia braces for fuel shortages and the world confronts the economic fallout from the US-Israeli war on Iran that could trigger a global recession, one country is reaping the spoils: Vladimir Putin’s Russia.

After 30 days of conflict in the Middle East, and with oil prices above $US100 a barrel, it is thought Russia has already collected billions in additional revenue – a boon just as Putin was facing serious budget pressure from a lagging economy and his war against Ukraine.

“Every $US10 increase in the oil price gives Russia Inc about $US100 million ($146 million) a day,” Carnegie Russia Eurasia Centre director Alexander Gabuev says, referring to the country’s oil companies. “So, you can look at where the price has been before the war started, where it is now, and make your guesses. Russia is pocketing billions of US dollars monthly.”

Those figures come from Sergey Vakulenko​​​​, Gabuev’s colleague at the Carnegie Endowment for International Peace, a Washington think tank. Vakulenko calculates that for each $US10 rise in the price of oil, Russian oil entities will raise an additional $US2.8 billion in revenue a month, of which the state will get $US1.63 billion.

The price of Russian Urals crude has essentially doubled since the summer, from below $US50 a barrel to above $US95, even $US100 – on parity with Brent crude. And when Russia sells oil to India, it typically indexes the price to Dubai crude, which, as Vakulenko says, has been “through the roof” of late.

Russia is benefiting not only from higher oil prices following Iran’s near-shutdown of the vital Strait of Hormuz, but also from the Trump administration’s decision to temporarily lift sanctions on Russian oil sales to India and, later, on all Russian oil already at sea before March 12.

According to the Finland-based Centre for Research on Clean Energy and Air, Russia’s daily oil sales to India were worth €60 million ($100.5 million) to €65 million at the end of February, based on a 14-day rolling average. By March 22, that had reached €125 million.

And on Monday (Washington time), a sanctioned Russian oil tanker, the ‌Anatoly Kolodkin, was approaching the Cuban port of Matanzas carrying about 730,000 barrels – a notable exemption to the US oil blockade on Cuba.

“They [Cubans] have to survive,” Trump said of the decision to let the tanker through. “I told them, if a country wants to send some oil into Cuba right now, I have no problem with it, whether it’s Russia or not.”

US lifts sanctions on Russian oil as Trump derides Iran’s leaders as ‘deranged scumbags’

White House press secretary Karoline Leavitt said there had been no change to the US’ overall sanctions policy. “This was a decision that’ll continue to be made on a case-by-case basis for humanitarian reasons or otherwise,” she said.

But the move represented a relaxation of the total US blockade on oil shipments to Cuba as Trump tries to pressure its communist government. “Cuba will be next,” he has said, suggesting a form of regime change.

The US has also stressed its decision to lift sanctions on Russia is temporary and limited to oil already at sea. US Treasury Secretary Scott Bessent said the financial reward for Moscow would be limited, if not negligible.

However on at least one occasion, Trump has suggested it might not be necessary to reimpose the sanctions because “there’ll be so much peace”.

At the start of the year, Putin’s Russia was struggling to cope with the financial impost of the long war against Ukraine and a failing economy. It increased VAT (value-added tax, like the GST) to 22 per cent from 20 per cent, and was contemplating 10 per cent cuts to “non-sensitive” spending areas, according to a Reuters report.

Now it has been thrown a lifeline. A study by the Kyiv School of Economics in Ukraine modelled scenarios depending on the length and outcome of the Iran war. In the “central scenario” – where the conflict lasts until late May and is followed by a fairly rapid return to normal in the Strait of Hormuz – Russian oil earnings would peak at $US28 billion to $US29 billion a month in April-May, and gas earnings at $US7 billion, before falling significantly.

Overall, in such a scenario, Russia would receive up to $US136 billion in additional oil revenue and $US25 billion in extra gas revenue in 2026, the institute estimates. Even in an optimistic scenario where the war is shorter, the figures were still $US70 billion and $US15 billion.

Gabuev told a Carnegie Endowment event in Washington on Monday: “The champagne that’s left [over in the Kremlin] since Donald Trump’s inauguration … if some of it’s not uncorked yet, it’s being uncorked now because that’s a major windfall.”

However, a temporary budget boon does not translate to a long-term advantage. The extra cash does not nearly make up for lost revenue from European Union sanctions on Russian oil, for example.

Nor does it necessarily alter Putin’s budgeting for the war against Ukraine. Vakulenko points out that Russian military expenditure was not going to be curtailed due to the budget crunch; rather, other government spending would take the hit.

He brings up a common Soviet-era joke. The government announces it is raising the price of vodka, and a boy asks his drunkard father: “Does this mean you’re going to drink less?” The father replies: “No, son, this means you’re going to eat less.”

Other analysts argue that the bigger picture of the US-Israeli war on Iran is bad for Russia and Putin. Sergey Radchenko, a professor in global affairs at Johns Hopkins University, argues that US assertiveness in the Middle East – and elsewhere – has revealed Russia’s “weakness and growing irrelevance”.

US-Iran war live updates: Trump threatens to ‘obliterate’ Kharg Island if deal not reached; Fuel excise cut to combat soaring petrol prices

Writing for Foreign Policy magazine, he says that rather than providing any material assistance to its notional allies Iran, Venezuela and Cuba, Moscow has been reduced to the role of onlooker.

And if the US ultimately strikes a deal with Iran, “its standing in the Middle East would soar, while Russia and China would have been exposed as paper tigers that are much better at talking about a new world order than putting their ambitious visions into practice”.

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© The Sydney Morning Herald