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Russia's wealth fund sheds $4.8bn

2 min read

11:21UTC

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 →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.

Occurred 13 Mar 2026

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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.

Occurred 17 Apr 2026

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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.

Occurred 1 Apr 2026

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Different Perspectives

EU Council / European Commission

With Orban's veto lifted and Magyar's Tisza government not placing a replacement block, the European Commission is signalling the first 90 billion euro Ukraine loan tranche for late May or early June 2026. Disbursement depends on Magyar's 5 May government formation proceeding to schedule.

Germany

Russia's Druzhba northern branch transit halt from 1 May removes one of Germany's residual non-Russian crude supply options. The timing compounds Berlin's exposure in the same week Ukrainian strikes drive Russian refinery throughput to its lowest since December 2009.

IAEA / Rafael Grossi

Grossi confirmed the Zaporizhzhia Nuclear Power Plant lost external power for its 14th and 15th times within a single week in late April, with the Ferosplavna-1 backup feeder damaged 1.8 km from the switchyard. He was negotiating a further local ceasefire; the previous IAEA-brokered repair lasted less than a week.

Japan

Japan authorised direct PAC-3 exports to the United States on 30 April, breaking its post-1945 arms export restrictions to replenish Iran-war-depleted US stockpiles. The White House global Patriot export freeze remains in place; Japan's historic policy shift benefits US readiness without reaching Ukraine.

Kazakhstan

Russia's Druzhba northern branch transit halt from 1 May cuts Kazakhstan's access to the German crude market. Astana routes most of its export crude through Russian infrastructure, meaning Moscow's unilateral decision directly constrains Kazakh export diversification despite Kazakhstan's stated neutrality on the war.

Péter Magyar / Tisza Party / Hungary

Magyar targets 5 May for government formation ahead of the 12 May constitutional deadline. Orbán lifted the EU loan veto before leaving office; Magyar supports Hungary's opt-out but has not placed a new veto, leaving the first 90 billion euro tranche on track for late May disbursement.