Finance Minister Anton Siluanov said the state budget took in a 200 billion rouble windfall from higher oil prices after a spike in global crude tied to tensions in the Middle East. That boost came even as Ukrainian drone strikes hit export hubs from the Baltic to the Black Sea, forcing evacuations and damaging ports, refineries and terminals. A Moscow-linked think tank and state economists say higher prices haven't fully offset lost output, and officials have trimmed growth and export forecasts. The gap between rising oil income and falling production is shaping Moscow's fiscal choices this year.

Finance Minister Anton Siluanov said the state budget had taken in 200 billion roubles in windfall oil revenues after a spike in global crude prices tied to tensions in the Middle East.

That boost arrived even as Ukraine stepped up long-range strikes on energy infrastructure inside Russia. Ukrainian drone forces commander Robert Brovdi said his units struck Primorsk, a major Baltic Sea export hub, and the NORSI refinery in Nizhny Novgorod region. Regional officials reported damage at terminals and refineries on the Black Sea and in the north.

Damage and disruption at export sites

Local authorities released video and statements showing large fires and oil burning in streets. Veniamin Kondratyev, governor of Krasnodar Krai, posted footage after several attacks on the Tuapse refinery and export terminal that showed thick smoke and local evacuations. He said emergency crews had to deal with boiling oil products on roads that damaged vehicles.

Alexander Drozdenko, governor of Leningrad region, described the area around St. Petersburg as a "front-line region" after repeated strikes near ports that handle exports. Ust-Luga and Primorsk, two major gateways for crude and refined products to world markets, were hit multiple times in recent weeks, according to regional posts and Ukrainian claims.

Mastheads

Those strikes have an immediate effect on flows. The damage forced shutdowns and halts to some port operations. Officials in affected regions reported fires and infrastructure damage. And state-linked analysts say the attacks have already lowered some physical shipments.

Revenues up, output and growth pressured

Even so, analysts close to Moscow warn the revenue spike isn't the same as a return to normal trade. The TsMAKP think tank said, "The forecast for Russian oil and petroleum product exports in 2026-2029 has been revised downward." The institute cut its 2026 gross domestic product growth forecast to between 0.5% and 0.7% from its previous 0.9% to 1.3% projection.

TsMAKP pointed to a mix of factors for the downgrade: Ukrainian strikes on ports and refineries, a halt to some pipeline supplies to Europe, and other pressures that reduce crude output and exports. The think tank said lower physical output would offset some of the gains from higher prices.

Moscow faces a split picture. Higher world crude prices after attacks on Iran and disruptions in the Strait of Hormuz pushed the dollar value of Russian oil sales up. But domestic production and the capacity to get barrels to market have been hit by targeted strikes and by sanctions that constrain some trading channels. The result is higher revenue per barrel but fewer barrels to sell.

That dynamic has policy consequences. Siluanov told state outlets the windfall helped cover earlier shortfalls in the budget. At the same time, senior officials have said the government's 1.3% growth forecast for 2026 was optimistic and would likely be revised downward.

Economic data show strains. Russia's economy contracted by 0.3% in the first quarter, the first quarterly decline since early 2023. President Vladimir Putin has pressed ministers for new ideas to lift growth, according to public remarks reported by officials.

Beyond the macro numbers, the attacks have local costs. Residents near hit facilities reported toxic smoke and environmental contamination. Tourist areas on the Black Sea have seen ash and fumes.

Related Articles

The TsMAKP think tank said it had cut its 2026 GDP growth forecast to between 0.5% and 0.7%, citing reduced oil production and exports.

This article was created with AI assistance.