12OCT

Russia's wealth fund sheds $4.8bn

2 min read

10:59UTC

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.

← Back to US licenses Russian diesel and turns on Kyiv Jump to analysis ↓

ConflictDeveloping

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 2026⁠¹. 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:SIPRI →Moscow →Urals →CREA →Iran →Saudi Arabia →Russia →Russia National Wealth Fund →Ukraine →Julian Cooper →

First Reported In

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

Moscow Times· 1 Apr 2026

Read original →

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

Read story →

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

Read story →

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

Read story →

Different Perspectives

Government of Latvia

Latvia abstained on 22 September when the EU renewed its individual sanctions for 36 months at the price of delisting Alisher Usmanov and Mikhail Fridman, and promised national sanctions of its own. Riga's abstention marks how far a frontline member state will go to keep listed names listed.

India's Ministry of External Affairs

After the House passed the Graham bill on 16 September, India's foreign ministry said it would keep buying energy on market terms and protect its trade. Russia supplied 30.3% of India's crude imports in fiscal 2026, so the tariff decision due around 18 October falls directly on New Delhi.

Kaja Kallas, EU foreign policy chief

Kallas answered the US licence on 10 October by saying Europe would not ease pressure, and EU ministers adopted a 22nd package of nearly 1,600 listings two days later. Brussels is tightening as Washington loosens, though TASS reported the package adds no significant new trade restrictions.

Donald Trump and the US Treasury

The Treasury licensed Russian diesel imports until 7 April 2027 on the day of Trump's call with Putin, and Trump then told reporters Ukraine should find a new leader. Washington is trading sanctions relief for fuel supply while pressing Kyiv to halt the refinery strikes behind the shortage.

Kremlin and Deputy Prime Minister Alexander Novak

After the 9 October call the Kremlin said Russia was ready to supply oil and petroleum products to American and global markets, and Novak brought forward the end of diesel export curbs. Moscow is selling the shortage back as goodwill, with volumes that Decree No. 686 now hides from outside checks.

Volodymyr Zelenskyy, President of Ukraine

Zelenskyy called GL 135 an investment in prolonging the war and offered to stop striking Russian refineries if Russia stops destroying Ukraine's energy system. Answering Trump's call for a new leader, he set a total 60-day ceasefire as the condition for elections, which puts the next move on Moscow.