MOSCOW, March 23 - The oil price spike triggered by the Iran war has allowed the Russian government to postpone a plan to boost long-term fiscal reserves, three sources familiar with the discussion
Russia delays change to fiscal fund after Iran war energy price surge
By Darya Korsunskaya and Elena Fabrichnaya
Impact of Iran War on Russian Fiscal Policy
MOSCOW, March 23 - The oil price spike triggered by the Iran war has allowed the Russian government to postpone a plan to boost long-term fiscal reserves, three sources familiar with the discussion told Reuters, relieving the pressure on short-term finances.
The postponement reflects that the Russian economy, while struggling with the cost of the military action in Ukraine and international sanctions, is one of the few globally to benefit from the U.S.-Israeli war on Iran.
International oil prices, which were trading around $70 a barrel before the war began at the end of February, have risen to above $100 a barrel. Gas prices have also surged.
Russian budget oil and gas revenues are expected to grow by 70% in April compared to March, reaching 0.9 trillion roubles, the highest monthly level since October 2025, according to Reuters calculations based on a price of oil set at $75 a barrel for taxation purposes.
Cut-off Price and Fiscal Reserve Mechanism
How the Cut-off Price Works
CUT-OFF PRICE DETERMINES HOW MUCH REVENUE FLOWS INTO FUND
Before the war began in Iran, Russia was seeking to channel more oil revenues into the reserve fund and said it planned to lower what is known as the cut-off price of oil. It also said that cuts to budget spending were discussed.
Any revenues, above the cut-off price, which is currently $59, go into the fiscal reserve National Wealth Fund.
The sources who could not be named because they were not authorised to speak publicly, said the government would now delay changing the cut-off price.
One of the sources said that since a legal amendment was needed to the budget law to make the change, it was now more likely to happen in 2027.
Timeline and Government Statements
Expected Changes and Official Announcements
CHANGES HAD BEEN EXPECTED VERY SOON
The Finance Minister Anton Siluanov said on February 25, three days before the war started, that the changes to allow a lower cut-off price would be announced within two weeks.
On Monday, however, President Vladimir Putin asked for a balanced decision on how to use the revenues generated by higher oil prices.
Speaking after the meeting with Putin on Monday, Siluanov said the government was considering measures to make the budget less vulnerable to the oil price fluctuations in the medium term.
Budget Calculation and Surplus Allocation
The Russian budget is calculated on an average annual oil price which is equal to the cut-off price. If the average monthly oil price is below this, the resulting deficit is covered from the reserve fund. If the average monthly price is above the cut-off price, the surplus goes into the fund.
Two other sources said they were briefed by senior government officials that the cut-off price will remain the same this year and that the need for spending cuts was also in question.
Macroeconomic Forecasts and Market Impact
Upcoming Forecasts and Currency Effects
NEW SET OF MACRO FORECASTS
The government will publish a new set of macro forecasts in April, which will include the expected average price of oil this year, which serves as guidance for the budget.
The reserve fund is held in foreign currency, now mostly yuan, which means it has a major impact on Russia’s foreign exchange market.
A government’s decision to pause forex sales from the fund as it discussed the new cut-off price led to a 6% slide in the rouble’a exchange rate against the dollar in March.
Central Bank Perspective and Future Outlook
Russia’s Central Bank Governor Elvira Nabiullina, speaking after a rate cut last week, said that it was too early to judge the impact of higher oil prices on the Russian economy.
During the press conference Nabiullina and her first deputy Alexei Zabotkin said the budget rule was Russia’s best protection against external shocks.
One person with knowledge of ongoing discussions said that even if the Iran crisis suddenly ends, most Russian policymakers expect the oil price to retain a risk premium for some time.
(Writing by Gleb Bryanski; editing by Barbara Lewis)
