The escalation of conflict in the Middle East, including disruptions to the Strait of Hormuz, has generated a global oil supply shock that has narrowed Urals discounts, accelerated deliveries to China and India, and delivered short-term revenue gains for Moscow, aided by the US temporary waiver on Russian crude sales until 11 April. The Kremlin regards these conditions as favourable yet temporary, with Putin cautioning against expectations of lasting relief, while the federal budget deficit already stands at 90 percent of the full-year plan and forces asymmetric spending cuts that protect military and social obligations. The section assesses how higher prices provide limited fiscal breathing room and reinforce perceptions of shifting geopolitical leverage in Ukraine, alongside Patrushev’s proposals for naval convoys and state protection of the shadow fleet.

SIGNIFICANT DEVELOPMENTS