Is Russia’s economy cracking despite the Iran war windfall?
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- Russia's economy is forecast to post its weakest growth since 2022, with a widening budget deficit exposing strain four years into the Ukraine war despite earlier resilience to Western sanctions.
- Ukrainian strikes are reaching deeper into Russia's economy, compounding fiscal pressure on top of the slowdown.
- Moscow retains more than $300bn in accessible reserves, cushioning the immediate impact of the deterioration.
- The Iran war has lifted global energy prices, handing Russia an oil revenue windfall as a major energy exporter.
- The US Senate has backed tariffs of up to 100% on Russian energy buyers, a move aimed at choking off that windfall.
Why it matters: Russia faces a narrowing fiscal window: even with $300bn in reserves and a temporary Iran-driven oil windfall, weakening growth and deeper Ukrainian strikes expose vulnerabilities just as the US moves to impose 100% tariffs on its energy buyers — squeezing Moscow's war financing from both the battlefield and the market side.
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