Putin’s prize: The oil price-spike

The spike in oil prices has been music to Vladimir Putin’s ears.

Until the latest version of the American-Israeli war with Iran began on Feb. 28, Russia’s war-oriented economy was in serious trouble. After initially surging as a result of the invasion of Ukraine, the economy has stalled, with the IMF forecasting in January that the Russian economy would grow only 0.6 percent in 2025 and 0.8 per cent in 2026.

Falling oil prices led to a slowdown in defense spending. When the Kremlin launched its war with Ukraine, fossil fuels accounted for 40 percent of the Russian budget. But then two things happened. By 2024, defense spending had doubled to 7.2 per cent of gross domestic product. Also, the price of Urals crude oil dropped from $90 a barrel in 2022 to less than $40 a barrel in December 2025.

Given those two new realities, oil and gas revenues dropped to less than 23 per cent of the Russian budget, compared to about 40 per cent in 2022. Unsurprisingly, defense spending, which had risen from 24 percent to more than 40 percent between 2021 and 2025, grew by only 0.1 per cent between 2024 and 2025.

When the U.S. launched Operation Epic Fury, the price of Urals oil had stabilized at about $65 per barrel........

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