Middle Eastern oil faces obstacles, Russian oil is selling like crazy, and the oil tax alone in April is expected to double!

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The Iran war is injecting a windfall into Russia’s finances. Reuters’ latest calculations show that, due to the global energy crisis triggered by the closure of the Strait of Hormuz, Russia’s oil mineral extraction tax revenue for April is expected to double from the previous month, reaching around $9 billion.

According to Reuters’ estimates, Russia’s oil mineral extraction tax revenue for April will surge from 327 billion rubles in March to around 700 billion rubles (about $9 billion), nearly doubling month-on-month and increasing by 10% year-on-year. This indicates that the Iran war is substantially improving the fiscal situation of Russia, the world’s second-largest oil exporter.

Russia said on Tuesday that, amid the severe global energy crisis that is shaking the foundation of the oil and gas market, demand for Russian energy from multiple sources has surged. Oil and gas traders describe this crisis as one of the most severe energy crises in modern history.

According to a previous article published by Wall Street Insights, Deutsche Bank pointed out that in the US-Iran war, the Middle East, due to an expected 75% drop in exports, has become the biggest loser; US energy gains are merely internal transfers, with limited overall national benefit; while Russia, by virtue of being the second-largest oil exporter, emerges as the biggest winner.

Hormuz Blockade Raises Oil Prices, Russia Profits

After the US and Israel launched airstrikes on Iran, Iran effectively closed the Strait of Hormuz—a shipping passage that carries about one-fifth of the world’s oil and liquefied natural gas flows. As a result, Brent crude oil futures prices surged well above $100 per barrel.

The base for calculating Russian oil taxes—the average price of Urals crude—jumped to $77 per barrel in March, the highest level since October 2023, up 73% from $44.59 per barrel in February, and significantly higher than Russia’s national budget base of $59 per barrel for this year.

The main fiscal source for Russia's oil industry is the mineral extraction tax. Since 2024, export duties on crude oil have dropped to zero under tax reform, making the mineral extraction tax the core oil and gas tax. According to the 2026 budget plan, the annual target for mineral extraction tax revenue is 7.9 trillion rubles.

Limited Benefits: Fiscal Pressure and Security Risks Remain

Despite improved energy revenues, the challenges facing Russia’s finances have not disappeared. Russian economists have repeatedly warned that 2026 will be a difficult fiscal year. First-quarter budget deficit data confirms this— a shortfall of 4.58 trillion rubles, accounting for 1.9% of GDP.

Meanwhile, Ukraine continues to launch attacks on Russia’s energy infrastructure, aiming directly at the fiscal lifeline of Russia, which has already dragged down related revenues and poses a potential threat to future oil output.

Reuters points out that the ultimate scale of Russia’s current round of energy income largely depends on how long the Iran crisis persists. Once the situation stabilizes and oil prices fall, this windfall will shrink accordingly.

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