Russia was expecting a windfall from soaring oil prices, but relentless Ukrainian drone attacks are devastating nearly half its export capacity

The U.S. war on Iran set up Russia’s economy for a major rescue after oil prices soared after the closure of the Strait of Hormuz. But if President Vladimir Putin was expecting a huge windfall, that view may literally be going up in smoke.

With one-fifth of the world’s oil supplies cut off, Russian oil suddenly became much more valuable. After trading at a steep discount to Brent crude, Urals oil nearly reached parity with the global benchmark.

The U.S. also temporarily lifted sanctions on Russian crude, despite warnings that the move would provide a vital influx of revenue to the cash-strapped Kremlin.

Just before President Donald Trump’s war on Iran, Russia’s oil and gas revenue had collapsed by 50%, and the government was draining its reserves to help pay for its war on Ukraine, now entering its fifth year, as budget deficits widened.

The spike in oil made Russia one of “the single biggest winners in the near term” from the Iran conflict, Wichita State University international business professor Usha Haley told Fortune‘s Marco Quiroz-Gutierrez last week. “It has actually rescued Russia’s oil revenues from decline and a decline over a very long period...