War in Iran May Not Save Russia Economy

Vladimir Putin must have been thanking his lucky star when President Trump launched strikes against Iran which caused global oil prices to spike. The combination of sanctions and relatively low oil prices had created a borderline crisis for Russia’s economy, now it seemed possible Russia would be in the money again. 

Just before President Donald Trump’s war on Iran, Russia’s oil and gas revenue had collapsed by 50%, and the government was draining its reserves to help pay for its war on Ukraine, now entering its fifth year, as budget deficits widened.

The spike in oil made Russia one of “the single biggest winners in the near term” from the Iran conflict, Wichita State University international business professor Usha Haley told Fortune‘s Marco Quiroz-Gutierrez last week. “It has actually rescued Russia’s oil revenues from decline and a decline over a very long period.”

But it may not be working out that way after all. A series of Ukrainian strikes on Russia’s oil terminals have probably cut off nearly half of their exports.

Ukraine launched a series of drone attacks on Russia’s top export hubs, including Novorossiysk on the Black Sea as well as Primorsk and Ust-Luga on the Baltic Sea.

According to Reuters calculations, about 40% of Russia‘s crude oil export capacity was shut down on Wednesday, marking the most severe oil supply disruption in the modern history of Russia.

The damage to these ports has been pretty significant and fires were seen burning for days.

Satellite imagery indicates significant damage at Russia’s Ust-Luga port in Leningrad Oblast following Ukrainian drone strikes.

Primorsk and Ust-Luga—Russia’s primary western oil export hubs—have both been targeted by Ukraine within the past four days. pic.twitter.com/skG1eRz2Z1

— Giorgi Revishvili (@revishvilig) March 27, 2026

Russia still has its eastern ports and can sell oil to Asia but selling half the oil for twice the price isn’t necessarily the boon that Putin was probably imagining a few weeks ago. Instead there are signs that Russia’s economy is still in trouble.

Russian President Vladimir Putin is going hat-in-hand to wealthy oligarchs, asking them to donate cold hard cash to boost the country’s depleted economy during its war in Ukraine.

Putin made the embarrassing request before a large group of Russia’s financial elite on Thursday — and promised to keep the war going until victory is reached despite the economic strain it’s caused, sources familiar with the meeting told the Financial Times…

At least two businessmen told Putin they would be happy to donate, including billionaire Suleiman Kerimov, who pledged more than $1.2 billion, sources told the outlet.

That’s a win I guess but it’s not a sign that the economy is booming again. And the Russian oligarchs aren’t the only ones being asked for more money.

Denis V. Maksimov says he accepts that small businesses like his three bakeries in a working-class town near Moscow will have to chip in more as Russia struggles to pay for the war in Ukraine.

But a 35-fold increase in his taxes? His bakeries, named Mashenka after his eldest daughter, would not survive, he feared. He and his manager counted “everything, down to the paper clips,” to see if they could make the numbers work…

The Kremlin has tried to bring inflation down by raising interest rates, going as high as 21 percent last year. They now stand at 15 percent after the latest round of easing last week.

To help bridge the gaps, the government has increased taxes on ordinary Russians, large corporations and smaller enterprises like Mr. Maksimov’s bakeries. That has brought the war home for many Russians after four years of efforts by the Kremlin to keep it mostly out of people’s minds.

Any move to raise additional revenue for what Russia calls the “special military operation” in Ukraine “will lead the civilian sector of the economy into a deep recession and significantly reduce the real income of the population,” said Oleg V. Vyugin, a former first deputy finance minister who now teaches at the Higher School of Economics in Moscow.

All signs point to Russia being broke and on the verge of a recession. The spike in oil prices may have bought Putin a bit more time but it can’t stave off the problem forever, especially if his oil export ports keep blowing up.

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