15MAR

Russia's wealth fund sheds $4.8bn

2 min read

04:55UTC

Rising oil prices could not prevent Russia's National Wealth Fund from haemorrhaging reserves as the business climate index turned negative for the first time in three years.

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Key takeaway

Russia's financial buffers are shrinking despite oil prices above budget assumptions.

Russia's National Wealth Fund shed 400 billion roubles ($4.8 billion) in January and February 2026 ¹. The country's business climate index turned negative in March for the first time since October 2022. Fixed capital investment fell 2.3% in real terms during 2025.

The Urals benchmark has risen $11.30 to $73.24 per barrel, well above Russia's $59 budget assumption. Yet rising prices did not prevent the fund's decline. Russia is spending 38 to 40% of its federal budget on defence, the highest proportion since the Soviet era . Moscow dropped planned 10% cuts to non-military spending after the Iran-war oil price surge, only to face a revenue squeeze from the opposite direction: not low prices, but destroyed export capacity at Baltic ports.

Deep Analysis

In plain English

Russia has a 'rainy day fund' called the National Wealth Fund, similar to a national savings account. It lost $4.8 billion in just two months at the start of 2026, even while oil prices were high. Why? Russia is spending 38-40% of its entire government budget on the military, the highest proportion since the Soviet era. High oil prices were supposed to offset that. But Russia is spending the money faster than it earns it. Now the oil export damage from the Baltic port strikes compounds the problem: Russia has high oil prices but can't ship as much oil. The business climate index turned negative in March for the first time in years, suggesting the civilian economy is feeling the strain.

Deep Analysis

Root Causes

Russia's fiscal deterioration reflects the simultaneous pressure of three forces. First: record defence spending at 38-40% of the federal budget, consuming reserves faster than revenues replenish them.

Second: investment collapse, with fixed capital investment down 2.3% in 2025, meaning Russia is not building the productive capacity needed to sustain long-term revenue growth. Third: the Baltic port disruption now compressing both the volume and revenue sides of the oil export equation simultaneously.

The business climate index turning negative for the first time since October 2022 is the civilian economy signal. It precedes consumer confidence deterioration by two to three quarters. If sustained, it indicates Russian business investment is contracting under war conditions despite high nominal oil prices.

What could happen next?

Consequence
At current NWF depletion rates, Russia may need to cut non-military spending or increase deficit financing within 12-18 months, creating domestic economic pressure on the war effort.

Source Landscape

This story draws on centre-left-leaning sources from Netherlands

Netherlands

Primary parallel: Saudi Arabia's National Transformation Plan 2016 was triggered by the sovereign wealth fund declining from $700 billion to $500 billion in two years under $30/bbl oil. Russia's NWF decline is faster relative to starting size, compressed into months rather than years, reflecting wartime spending intensity.

Counter-parallel: Iran sustained 40+ years of economic warfare under international sanctions without fiscal collapse, partly through currency controls and a dual-economy structure. Russia is implementing similar mechanisms, but Iran's population adapted to a much lower baseline. Russia's population has not, and domestic expectations remain higher.

The NWF's $4.8 billion two-month drawdown at current rates would exhaust the remaining fund within approximately 18 months at current spending levels, though Baltic port revenue losses accelerate that depletion schedule.

Structurally, Russia's 2026 budget assumed $59/bbl Urals and has a $73.24 actual price, providing approximately $21.7 billion in annual revenue surplus over assumption. But the 43% export volume drop eliminates most of that price surplus: Russia is shipping 11 million barrels per week at $73 rather than the projected 17 million barrels at $59. The price advantage cannot compensate for the volume loss.

Consensus view: SIPRI's Julian Cooper and Oxford Economics Russia analyst Timothy Ash both assess that Russia's 38-40% defence spending share is structurally unsustainable beyond 18-24 months without oil revenues that now face export volume constraints from Baltic port damage.

Counter-view: Russian Central Bank Governor Elvira Nabiullina has argued that Russia's economy has proven more adaptive than Western analysts predicted in 2022, with import substitution, rerouting to Asian markets, and domestic demand absorbing shocks that models forecast would be destabilising. She projects continued fiscal management through Q3 2026.

Key tension: Whether Russia's fiscal resilience reflects genuine structural adaptation or the one-time effect of the Iran-war oil price surge that the Baltic port strikes have now partially reversed.

Sources:Moscow Times

Mentions:Time →SIPRI →Moscow →Urals →CREA →Iran →Saudi Arabia →Russia →Russia National Wealth Fund →Ukraine →

First Reported In

Update #9 · Ukraine halves Russia's Baltic oil exports

Moscow Times· 1 Apr 2026

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Causes and effects

Caused by

Russia fossil fuel revenue: €510m/day

Russia's €510M/day fossil fuel windfall from the Iran war oil surge allowed it to drop planned spending cuts, but Baltic port destruction then created a volume-side revenue squeeze.

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Reshetnikov tells Meduza Russia's reserves exhausted

Reshetnikov's admission of exhausted reserves contextualises the $4.8 billion NWF loss documented in the prior event.

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This Event

Russia's wealth fund sheds $4.8bn

The fiscal data shows that record defence spending is eroding Russia's financial buffers faster than wartime oil revenues can replenish them.

Led to

Tisza Leads Polls but EU Loan Faces June Delay

Ukraine's mid-May resource depletion deadline makes the Hungary election outcome and EU loan disbursement timeline directly material to Ukraine's war capacity.

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Different Perspectives

Markets

Brent crude rose 2.2 per cent to $96.34 on 10 June, reversing a 7 per cent weekly decline built on deal optimism, as the overnight exchange repriced the Strait of Hormuz risk premium in a single session. The move reflects transit-risk repricing rather than supply shock: Iran's exports had already collapsed to below 300,000 barrels per day.

Pakistan

Pakistan's Naqvi channel, the only mediation track carrying both civilian and military buy-in, was stress-tested by live ordnance within 48 hours of the 6-7 June Tehran visit. Whether Washington informed Islamabad of the imminent strike plan while Naqvi was in Tehran remains undisclosed, putting the channel's neutrality under scrutiny.

Kuwait

Kuwait hosted the third Iranian strike on its soil since the 3 June airport drone attack, with Ali Al Salem airbase targeted in the three-country salvo. Its recent $1.98 billion Anduril Anvil counter-drone purchase signals it is rearming rather than reconsidering its hosting posture.

Bahrain

Bahrain absorbed the IRGC barrage via PAC-3 intercepts with its magazine already at 87 per cent depletion and no resupply before 2027. Sounding air-raid sirens over Manama, it faced the intercept burden with the thinnest defensive stack in the Gulf coalition.

Jordan

Jordan reported all five incoming missiles intercepted with no injuries and no damage, a clean defensive performance that strengthens Amman's case for staying in the Western coalition without escalating its own posture. It now sits on Iran's target list for the first time despite not being a party to the Abraham Accords confrontation.

Iran / IRGC

Foreign Minister Araghchi posted on X that US forces should 'leave our region if you want to be safe' and framed the exchange as a US defeat, while the IRGC claimed 21 targets hit and an F-35 hangar destroyed. The claims serve a domestic and Arab-audience framing rather than a verified battle-damage assessment.