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Russia Gains From Iran War as Urals Climbs to Highest Level Since 2023

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Russia's Urals crude price climbed to $94.87 per barrel in May tax calculations, the highest level since October 2023, according to a Bloomberg analysis on Thursday.

Russia's finance ministry will calculate May oil taxes using an exchange rate of 76.938 rubles per US dollar, lifting the Urals value to nearly 7,300 rubles ($99.52) per barrel, up 18% over the month and 60% over the year.

The Iran conflict has lifted global oil prices and increased demand for Russian crude after disruptions around the Strait of Hormuz tightened energy supplies worldwide.

Russia relies on oil and gas for roughly 20% of its revenue, while stronger energy earnings are helping the Kremlin fund military spending, according to the analysis.

Rising oil income has also allowed Moscow to avoid reducing lower-priority government spending as additional petrodollar inflows strengthen public finances, the analysis said.

A stronger ruble is limiting some of Russia's oil revenue gains after the currency climbed to its highest level against the US dollar since February 2023 this month.

Russia's high interest rates, weaker import demand, and larger foreign-currency sales from exporters have supported the ruble, while the stronger currency reduces proceeds from dollar-based oil exports.

The government also sharply increased refinery support payments after fuel prices surged during the Iran conflict, with subsidies to Russian energy firms reaching 359 billion rubles, or about $4.8 billion, in April, according to the analysis.

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