Russia's oil windfall is swallowed by payouts to its own refiners

Noise in the price, signal in the compensation

The Moscow Times reported on 5 October that the oil price used in Russian energy taxes averaged 92.10 dollars in September, up from 67.10 dollars in August. That 25-dollar jump feeds the story that the Hormuz crisis has handed Moscow a revenue bonanza. The Finance Ministry also announced it would buy 279.4 billion roubles of foreign currency and gold between 7 October and 6 November, or 12.7 billion roubles a day.

Actual revenue points the other way. Finance Ministry data cited by Ukrainska Pravda, drawing on The Bell, show oil and gas revenue fell 22% year on year to 452.4 billion roubles in September. The August decline was 16%, so the loss deepened as prices rose. The January–September total of 5.47 trillion roubles is 17.2% below a year earlier. September revenue also missed the ministry's own expectation by 10 billion roubles.

Constraint 1 · Compensation carries refinery strikes into the budget

The damper explains September's gap. The state pays this compensation to refiners that sell fuel at home below export prices, and the same data show it rising from 197.3 billion roubles in August to 305.5 billion in September, an increase of 108 billion. Mineral extraction tax rose over the same period from 702.7 billion to 807 billion roubles, a gain of 104 billion. All of the extra 104 billion roubles in tax generated by higher prices, plus another 4 billion, flowed straight back to refiners.

What swelled the compensation was a domestic fuel shortage that has run through 2026. The Moscow Times says Ukraine's refinery strikes triggered two major waves of national fuel shortages this year, and the average petrol price has risen more than 21% since January. In Sevastopol petrol peaked at 131.76 roubles a litre on 12 October, and restrictions were lifted only on 19 October. The strikes continue: on 20 October a fire broke out at the Nikolskoye station on the Druzhba pipeline in Tambov, which has a pumping capacity of 300,000 tonnes a day.

Constraint 2 · The buffer has reached physical gold

According to the Moscow Times on 1 October, the 2026 budget deficit forecast rose from 3.785 trillion to 7.345 trillion roubles, or 3.2% of GDP. For 2027 the plan foresees a deficit of 5.443 trillion roubles and record defence spending of 17.1 trillion, up 27%. Verstka says 34.9% of 2027 spending is classified. The draft goes to its first reading in the Duma on 29 October.

Deficit financing has moved beyond the liquid fund into physical reserves. The Moscow Times reports that the central bank's gold holdings fell by 200,000 ounces in September to 72.8 million ounces, the tenth month of sales. Interfax had put the stock at 73 million ounces, worth 333.5 billion dollars, on 1 September. On 20 October the Moscow Times wrote that these sales mirror the Finance Ministry's drawdowns from the National Wealth Fund to cover the deficit. In other words, October's 279.4 billion rouble currency purchase rests on a forecast, while September's gold sales rest on a deficit that has already happened.

Constraint 3 · Rates are now tied to the budget

The Bank of Russia held its policy rate at 14% on 11 September, putting annual inflation at 6.3% and core inflation at 7.0% as of 7 September. Its statement warned that tighter policy might be needed if the government's new budget projections showed a larger structural primary deficit. Those projections went to the Duma on 1 October and doubled the 2026 deficit. The decision will be announced at 13:30 Moscow time on 23 October.

Economists polled by Izvestia on 16 October expect the rate to stay at 14% and cuts to resume in the first quarter of 2027. The same report puts September annual inflation at 6.35% and household inflation expectations at 14.2%. As fuel prices feed expectations, compensation binds the budget and the budget binds the rate; all 3 links in the chain are driven by the same refinery strikes.

What it means for Ankara and the region

The Türkiye and Neighbourhood Desk's 18 October report tied Ankara's diesel supply to bargaining between Washington and Moscow. This picture shows the other face of that link: according to the Moscow Times on 20 October, the Tambov strike came immediately after the US deal to raise Russian diesel exports. Russian refiners cannot simultaneously supply the domestic market and the revenue forecast on which the 279.4 billion rouble purchase plan depends. Over the next 2–3 months, Russian refined product exports are therefore likely to hinge on the strike calendar more than on commitments.

The geography of the strikes is also widening. The Kyiv Independent reports that between 8 and 18 October Ukraine hit 3 Yandex data centres, a Sberbank facility and a VK data centre alongside energy sites. The same report says Russia targeted 28 substations in Ukraine on 19 October, with fresh outages in 12 regions on 20 October. Moscow's compensation bill and Kyiv's grid repair bill are growing at the same time ahead of winter. Whether the 20 October talks in Oslo produce an energy pause is therefore the most important external variable for the budget picture.

What would refute this reading

Three developments over the next 6 weeks would weaken the thesis. If October oil and gas revenue delivers the 289.5 billion roubles of extra income the ministry expects and the damper falls below 200 billion roubles, the compensation constraint loosens. If an energy ceasefire covering refineries between Kyiv and Moscow holds for 30 days, domestic fuel prices and compensation fall together. If the central bank cuts on 23 October without highlighting budget risk, the rate link in the chain will prove weak.