Hormuz Closure Lifts Oil Prices and Russia’s Tax Windfall

Russia faces higher oil tax receipts after the closure of the Strait of Hormuz pushed global crude to an average $106.30 a barrel in the first 13 days of April, a 42% rise from March. Moscow uses Argus Media pricing to calculate oil-related taxes, making the April spike directly relevant to state revenue.

The surge lifted the value of Russia’s Urals export blend well above the level built into the 2026 budget. The budget assumes Urals at $59 a barrel. If the April average holds and the ruble remains near current levels, Urals could reach about 8,300 rubles per barrel, the highest monthly level since March 2022.

The immediate cause was a cut in flows through the Strait of Hormuz, which reduced Middle Eastern crude availability and forced refiners to source barrels from other suppliers. That supply shift tightened available volumes, altered trade routes and increased premiums on deliverable oil, benefiting sellers with export capacity at western Russian ports.

The International Energy Agency said the shock is weighing on oil demand. It now expects a second-quarter demand contraction of 1.5 million barrels per day and a full-year decline of 80,000 barrels per day versus its prior forecast of 640,000 barrels per day of growth. The agency reported global observed oil inventories fell by 85 million barrels in March. Stocks stored outside the Middle East Gulf declined by 205 million barrels, floating storage in the Middle East rose by 100 million barrels, and onshore crude stocks in the region increased by 20 million barrels. China added 40 million barrels to storage in March. The IEA noted spot crude and differentials have risen faster than futures, with North Sea Dated trading near $130 a barrel.

Oil futures eased after U.S. Senator JD Vance suggested talks with Iran might continue. In a television interview, he said, “Whether we have further conversations, whether we ultimately get to a deal, I really think the ball is in the Iranian court, because we put a lot on the table.” Following his comments, U.S. crude futures for May delivery fell about 6% to $93.07 a barrel and Brent for June delivery was down nearly 4% at $95.58.

The IEA warned the outlook contains downside risks for supply and for its recovery assumptions, adding, “We recognize that this scenario could prove too optimistic.” The agency said damage to port and energy infrastructure could prevent Russia from raising production materially above early first-quarter levels, and that a prolonged conflict could create further disruption.

For the Russian budget, the current price environment would increase oil-tax revenue if prices stay elevated and the exchange rate does not move sharply against the ruble. How long elevated Urals prices persist will depend on developments in the Strait of Hormuz, any diplomatic progress, and how higher fuel costs affect demand.