Russia’s oil tax revenues jumped to a six-month high last month as the Kremlin started reaping the benefits of a crude rally driven by the war in Iran. With oil still trading near $100 a barrel, the windfall is set to continue.

Russian producers paid 707.1 billion rubles ($9.5 billion) in federal oil taxes last month, the highest since October, according to Bloomberg calculations based on Finance Ministry data published on Wednesday. Total oil and gas revenues reached almost 856 billion rubles. 

The Kremlin, which relies on the oil and gas industry for around a fifth of its revenues, is benefiting as shipping through the vital Strait of Hormuz has come to a near-halt, choking off exports from top Persian Gulf producers in an unprecedented supply disruption. To ease the crisis, the US issued temporary waivers allowing a wide range of nations to buy Russian cargoes in transit, boosting demand and prices for the country’s flagship Urals export blend.

The Urals price used to calculate April oil taxes averaged $77 a barrel, up from about $59 a year earlier, according to Russia’s governmental data. As the taxes are calculated based on Urals prices for the previous month, the full effect of the rally will continue to boost revenues into May. 

Extra petrodollars are a welcome addition to Russian coffers drained by massive spendings on the war in Ukraine. Still, President Vladimir Putin has on several occasions warned his government that the spike in oil prices is only a temporary trend and should not be relied on. 

Benchmark Brent crude futures have retreated more than 10% over the past two days on hopes of a peace deal between the US and Iran, though they remain up by almost 70% this year near $100 a barrel. 

Russia’s oil-tax proceeds in April would have been even higher if it weren’t for massive state subsidies to the nation’s energy companies, aimed at supporting the domestic oil refining industry. The state paid a total of 359 billion rubles, equivalent to some $4.8 billion, to refineries in April, the highest monthly subsidy in over two years. More than half of the payouts partially compensated refiners for lower gasoline and diesel prices in Russia than abroad as global fuel prices jumped.

As a result, on an annual basis, Russia’s oil-tax revenues declined by over 28% in April. 

A year-on-year decline in oil-tax revenues may also be partially explained by lower Russian oil production. For the past several months, the output levels have consistently been below Moscow’s quota under an agreement with the Organization of the Petroleum Exporting Countries. 

Production levels were likely impacted by Ukraine’s intensified attacks on Russian oil infrastructure, as repeated strikes on refineries and export terminals limited Moscow’s ability to sell and process its barrels. In March, Russia’s crude-only output remained virtually flat after three consecutive months of decline, according to OPEC data. 

Still, Moscow has clearly benefited from the energy crisis caused by the Iran war. Russia’s May revenues will be calculated based on an even higher Urals prices of nearly $95 a barrel, according to the data from the nation’s Economy Ministry.

In ruble terms, based on Bloomberg calculations, May’s tax levels will be based on the Urals price of almost 7,300 rubles, the highest level since November 2023. 

The surge in oil prices and windfall revenue has allowed Russia to resume replenishing its National Wellbeing Fund, which more than halved recently due to military spendings on the Kremlin’s full-scale invasion of Ukraine.