Russia's Economy Strains Despite Iran War Windfall
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- Russia's economy has defied Western sanctions longer than many expected, but four years into the Ukraine war the strain is starting to bite, with growth forecast to slow to its weakest pace since 2022.
- Russia's budget deficit is widening while Ukrainian strikes are reaching deeper into the economy, adding military-driven pressure beyond sanctions.
- Moscow retains more than $300 billion in accessible reserves, cushioning the blow even as financial pressures mount.
- The US-Israel war on Iran has sent energy prices higher, handing Russia an unexpected revenue windfall by boosting oil revenues.
- The US Senate has backed tariffs of up to 100 percent on Russian energy buyers, a direct bid to cut off the very Iran-war windfall currently padding Kremlin finances.
Why it matters: Moscow still has $300bn in accessible reserves to absorb a widening deficit and post-2022-slow growth, but the Senate-backed push for up to 100% tariffs on Russian energy buyers directly targets the oil-revenue windfall from the Iran war that is currently offsetting the strain — turning a Middle East tailwind into a targeted liability for the Kremlin.
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