Russia’s economy is stagnating even with substantial benefits from the war in the Middle East – yet no economic analysis can determine the moment when Russia’s resources for war will be exhausted, Ukraine’s central bank, the National Bank of Ukraine (NBU) wrote in its April 2026 Inflation Report.
High oil prices add funds for Russia’s war machine, expanding its capacity to finance military expenditures and scaling up the production of strike weapons that target civilians in Ukraine, but it remains the last strain that keeps Russia’s economy from budget collapse, the NBU wrote.
In its April 2026 inflation report, the NBU documented how shipping insecurity in the region pushed oil buyers to pay premiums for supplies available immediately and outside conflict zones.
Strait of Hormuz disruptions hand Moscow a windfall
Recently, US Treasury Secretary Scott Bessent announced another allowance for countries to buy Russian oil that was previously sanctioned, the exemption is intended to help “poor and vulnerable countries” facing supply shortages after access to Gulf oil supplies was disrupted.
Due to the threat to shipping security posed by the war in the Middle East, buyers are willing to overpay for oil that can be obtained immediately and from safe regions. Combat operations and shipping threats have disrupted the Strait of Hormuz, a strategic chokepoint through which approximately 25% of global seaborne oil and 20% of liquefied natural gas are transported.
The oil purchases sharply boosted Russia’s revenues, according to Ukraine’s central bank analysis.
“In just three months, from January to March, the income from seaborne oil exports grew from $1 billion to $2.5 billion per week. Importantly, this happened not due to an increase in sales volumes, but solely due to price growth,” the NBU’s Inflation report says.
The sanctions discount on Russian Urals crude, previously $20-25 below global benchmarks, narrowed to just $5-8, prompting the NBU to describe it as “financial doping” for Russia’s struggling economy. The “doping” provided a boost precisely when Russia’s “internal problems became critical”: oil and gas revenues in Q1 2026 fell by 45.4% year-on-year, and the budget deficit already reached 1.9% of GDP, exceeding the annual target of 1.6% of GDP, NBU wrote.
Behind the oil revenues, Russia’s economy is breaking down
Ukraine’s central bank concluded that Russia’s economic model in 2026 has finally transformed into a “military-administrative one” and is currently in a state of “fragile equilibrium.”
“Russia’s real GDP in Q1 2026, according to preliminary estimates, declined for the first time since early 2023 (by 0.3% quarter-on-quarter). Despite significant military orders, the economy has entered a phase of stagnation, and its structural imbalances are deepening,” the NBU wrote.
The drivers of internal growth in Russia’s economy are absent, while sanctions are acting cumulatively – undermining the aggressor’s economic base through technological isolation, logistical complications, and financing constraints, according to the report.
“High oil prices remain the only factor preventing a budget collapse,” Ukraine’s central bank wrote. The country’s export revenues doubled in March compared to February, it added.
Why no economist can say when Russia runs out
Despite the short-term benefits, chronic underinvestment in civilian infrastructure, a systemic personnel shortage, high inflationary pressure, and the rapid depletion of National Wealth Fund reserves all undermine Russia’s long-term sustainability.
At the same time, no economist can pinpoint exactly when Russia’s economy collapses – or whether it will collapse at all – given the irrational nature of Russian politics and the state’s disregard for its citizens’ welfare. That disregard has so far generated only weak public pressure, even as the Kremlin tightens control, including cutting Moscow off from the open internet. Meanwhile, Russian citizens, at the same time, continue to enlist and fight against Ukraine drawn by high salaries for contract soldiers.
“Economic analysis cannot precisely determine the moment when the aggressor’s resource base for waging war will be exhausted. This process may follow a non-linear logic, driven exclusively by political considerations and the ignoring of internal problems,” Ukraine’s central bank wrote.
This is why it is crucial to maintain sanctions pressure on Russia, mobilize international support for Ukraine’s defense, fund its macroeconomic stability, to continue fight against Russia’s illegal invasion, and support Ukraine’s continued reforms toward EU accession, the NBU wrote.