The rise in crude oil prices does not help Putin

In the first three weeks of October, the price of oil used by Russia to calculate oil taxes was 60 per cent higher than that assumed in the federal budget. The budget had in fact forecast a price of $59 per barrel (the average this month is around $100) and an exchange rate of 92.2 roubles to the dollar (compared with the current 84 roubles). Therefore, although every dollar earned from oil yields around 9 per cent fewer roubles than expected, the rise in crude oil prices will increase the Kremlin’s tax levies on oil companies, providing Putin with more resources than anticipated to continue his war against Ukraine. But one good month does not make up for so many bad ones.

According to Reuters estimates, which also include this October, revenue from Oil & Gas in the first ten months of 2026 will be 14 per cent lower than in the same period of 2025. The main cause lies in the decline in Russian oil production, which has been paralysed by Ukrainian attacks on Russian refineries, triggering a fuel crisis in the summer, with long queues at petrol stations and restrictions on petrol sales in some regions of Russia. In September alone, the Kremlin paid 305.5 billion roubles (around 3.7 billion dollars) in ‘damper’ payments – the subsidy for refiners that effectively keeps petrol prices lower. The forecast for the federal budget deficit in 2026 has, for the time being, doubled to 3.2 per cent of GDP, up from the previously estimated 1.6 per cent, despite the opportunity to sell crude oil on the international market whilst the Strait of Hormuz was closed – thanks to the easing of sanctions by the United States – and despite the diesel agreement between President Trump and Putin, which, according to Kpler, will in fact add just 73,000 barrels a day from the first shipments. None of this has been enough to put Russia’s finances back in order, not even the increase in the tax burden on citizens, with VAT rising from 20 to 22 per cent. It is not known whether further ‘gifts’ from Trump are on the way, but the Kremlin has already raised its military spending forecast for 2027 by 27 per cent.