For all the talk of crude benchmarks and market panic, wars are not financed by headline prices. They are financed by realised revenue.

Russia benefits from higher oil prices only if it can still refine, store, ship and sell enough oil to market. Ukraine’s strategy is increasingly aimed at breaking that link.

That is why Russia’s decision to expand its gasoline export ban on 2 April matters.

The measure, in force until 31 July, now applies to producers as well as non-producers, with exemptions only for countries covered by intergovernmental fuel-supply agreements, such as Mongolia.

This is a sign of pressure: Ukrainian strikes are beginning to create domestic fuel stress. 

Russia should have been one of the clearest winners of the latest oil shock.

Russia exported about five million metric tons of gasoline last year, or around 117,000 barrels per day. The closure of the Strait of Hormuz disrupted around 12 million barrels per day of crude and refined products — roughly 12 percent of global supply — and sent physical oil prices surging, reaching a record high of $150 [€128] per barrel.

The effect on Moscow’s finances was immediate.

Centre for Research on Energy and Clean Air (CREA)-based data suggest Russia earned around €6bn from fossil-fuel exports in the first fortnight after the Iran war began, with about €672m in additional March revenue. 

In short, the war in Iran has, at least temporarily, eased the budget strain hanging over the Kremlin after months of weaker revenues and sanctions pressure. 

Windfall – but also a problem

But Russia’s apparent windfall has collided with an immediate problem: Ukraine has become increasingly effective at striking the infrastructure that allows Russia to monetise high prices in the first place.

Reuters reported last week that Ukrainian strikes on ports, pipelines and refineries had cut Russian export capability by around one million barrels per day — about a fifth of export capacity.

Over the past week, Ukrainian drones have targeted major export terminals such as Ust-Luga and Primorsk on the Baltic Sea, as well as refineries deeper inside Russia, which have together temporarily halted roughly 40 percent of Russia’s oil export capacity.\

Higher crude prices help the Kremlin only if Russia can still refine, load and ship enough oil to market. Ukraine’s strategy appears designed precisely to break that link.

As the war in Iran inflates the value of every exportable barrel, Kyiv is trying to reduce the number of barrels Russia can actually sell.

This matters politically as much as militarily. The more effective these strikes become, the more they expose a contradiction Europe has tried to manage since 2022: weakening Russia’s war machine can itself tighten energy markets and raise prices at home.

Angst in Brussels

That is already reshaping debate in Brussels.

Five EU finance ministers — from Germany, Italy, Spain, Portugal and Austria — have called for a new EU-wide windfall tax on energy companies, explicitly reviving a tool first used during the 2022 energy crisis after Russia’s full-scale invasion of Ukraine.

Other emergency measures are again being discussed as governments look for ways to cushion consumers from another imported energy shock. Europe is not starting from zero. But it is back in crisis mode. 

And as always, high prices are reviving old temptations.

Unsurprisingly, Hungary’s Viktor Orbán has been among the loudest voices calling for a return to Russian energy, urging the EU to suspend sanctions on Russian fossil fuels.

More strikingly, Belgian prime minister Bart De Wever said in March that Europe would eventually have to normalise relations with Russia and “regain access to cheap energy” — a line of thought Moscow openly encourages. 

Those are not fringe murmurs. They are early signals of the pressure that prolonged energy pain can create inside the EU itself.

The official Brussels line remains firm

Energy commissioner Dan Jørgensen said in March that the EU had decided it did not want to re-import Russian energy and must not again help finance Russia’s war. The EU’s gas phaseout plans reflect that position. So for Ursula von der Leyen’s commission, a return to cheap Russian energy is not a fallback option.

Since 2022, the EU’s core energy-sanctions logic has never been to remove Russia from the market overnight, hence oil price caps and shipping restrictions.

It has been to reduce the Kremlin’s earnings while avoiding a global price spike that would hurt Europe and its allies – the spike that is now, due to exogenous factors, unfolding.

That is why the real question is no longer whether higher oil prices help Russia. They do. The real question is whether Europe is willing to tolerate the side effects of a strategy that also makes it harder for Russia to cash in.

Kyiv is betting that its allies will accept higher energy prices, renewed market volatility and growing domestic discomfort if the payoff is lower Russian war revenue. Orbán is betting the opposite. So, it seems, might De Wever.

Europe will have to decide which bet it is willing to make.

This Op-Ed was originally published by EU Observer.

Jessica Moss is Editor at the European Policy Centre (EPC). 

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