War against Iran saves Russian economy through rising oil prices - Politico
Kyiv • UNN
The jump in oil prices above $100 has become a lifeline for the Russian budget. Experts believe this will help the Kremlin postpone difficult decisions.
Russian dictator Vladimir Putin is faced with a difficult choice - to limit or completely stop the war against Ukraine or risk seriously damaging his economy. In addition, another problem has emerged in the world - hostilities in the Middle East between Iran on the one hand and the United States and Israel on the other. After attacks on Iranian oil facilities last weekend, oil prices soared to over $100 per barrel, reaching their highest level since the summer of 2022, when markets sharply rose after Russia's full-scale invasion of Ukraine.
For Russia, the jump in oil prices is an economic gain at a crucial moment, as the cost of four years of war in Ukraine threatened to escalate into a domestic economic crisis. This was reported by UNN with reference to Politico.
Details
The Russian Ministry of Finance's budget plan for this year assumed a baseline of $59 per barrel of Urals oil, the country's main export blend. But in January, energy revenues fell to their lowest level since 2020, exacerbating already disappointing tax revenues.
However, even despite Western sanctions and labor shortages, this was far from a collapse of the Russian economy, said Sergei Vakulenko, a senior fellow at the Carnegie Russia-Eurasia Center.
At the same time, the Russian government never aimed to stop the war against Ukraine. But later, when Israel and the United States attacked Iran, shipping through the Strait of Hormuz stopped, causing oil prices to skyrocket.
According to Russian opposition politician and former Deputy Minister of Energy of the Russian Federation Vladimir Milov, Moscow received its "lifeline." He added: instead of selling oil at a discount due to Western sanctions, Russia can now get higher prices for it, as its main buyers - India and China - are trying to secure supplies.
However, experts warn that it is too early for Moscow to celebrate victory.
For the economy to feel a significant difference, Russia needs oil prices to remain at the current level for approximately a year. One or two months of high prices will certainly help, but will not save the situation
Sergei Vakulenko believes that a short-term jump in prices will only help postpone difficult decisions.
Recall
Earlier, UNN reported that Iran plans to introduce duties on tankers and vessels in the Persian Gulf.