High oil prices help, but won’t solve, Russia’s economic troubles

Abstract

With the gyrating, generally upward trend in crude oil prices since the outbreak of the Iran war, oil price trends – particularly their impacts on Russian economic output and government finances – deserve consideration. While any analysis necessarily involves significant uncertainty from unfolding events, we can say higher oil prices traditionally support Russia’s economy by increasing export earnings and tax revenues. The impact of oil prices, especially on government finances, also depends on the exchange rate.