Russia oil and gas revenues up 40% in May on Iran war pressures

Russia’s oil and gas revenues are expected to jump 39% year on year in May to about RUB700bn ($9.8bn), buoyed by higher global crude prices driven by the conflict involving Iran, according to Reuters calculations published on May 20.

The increase would provide temporary relief for the Kremlin as it continues to finance elevated military and security spending linked to its campaign in Ukraine, now in its fourth year. Oil and gas receipts account for roughly one-fifth of Russia’s total budget revenues and remain the country’s most important source of foreign currency earnings.

Russia, the world’s third-largest oil producer and exporter after the US and Saudi Arabia, has benefited from a rally in oil prices since the outbreak of the US-Israeli conflict involving Iran at the end of February. Brent crude has traded at elevated levels in recent weeks amid concerns over potential disruptions to Middle Eastern supply routes.

Despite the expected annual increase, May revenues are projected to fall about 17% from April because of seasonal payments linked to Russia’s profit-based oil taxation system.

Data published by Russia’s finance ministry showed oil and gas revenues reached RUB855.6bn ($10.9bn) in April, the highest monthly level since October and a 38.7% increase from March, when revenues stood at RUB617bn ($7.9bn). The figure nevertheless remained 21.2% below the level recorded in April 2025, The Bell reports.

Nevertheless, the federal budget deficit remains very high and has already blown through the year end forecast of 1.6% of GDP, and is on track to finsih at between 3-4% of GDP, according to analysts. The federal budget posted a deficit of RUB1.3 trillion ($14.3bn) in April, widening the cumulative 4M26 deficit to RUB5.9 trillion ($64.9bn), or 2.5% of GDP.  This has already made 55% of the full-year budget target, according to Russian investment bank Renaissance Capital's estimates. 

The federal budget is also facing growing costs from subsidies to domestic refiners through reverse excise tax mechanisms and so-called damper payments, which are designed to shield the domestic fuel market from swings in export prices.

According to Reuters calculations, Russia’s oil and gas revenues for the January-to-May period are expected to decline by roughly one-third from a year earlier to RUB3 trillion ($42bn). The fall reflects lower export volumes earlier in the year as well as the lingering effects of western sanctions and price caps on Russian energy exports.

The Ministry of Economy just released one of the most pessimistic economic outlooks for 2026 in years and downgraded the growth forecast to 0.4% from 1.5% previously.

The Russian government’s 2026 budget projects oil and gas revenues of RUB8.92 trillion ($125bn), out of total expected federal revenues of RUB40.283 trillion ($565bn). In 2025, federal budget oil and gas revenues fell 24% to RUB8.48 trillion ($119bn), their lowest level since 2020, according to official data.