Higher oil prices are making Russia richer — but not helping its economy grow, Goldman says

Rising oil prices are boosting the Kremlin's finances under Russian President Vladimir Putin, but economic growth remains sluggish.

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Sanctions-hit Russia is raking in more money from high oil prices, but that doesn't mean its economy is about to take off, according to Goldman Sachs.International benchmark Brent crude futures were trading around $92 a barrel late Tuesday — about 30% higher since the Iran war started. That's a boon to Russia, the world's third-largest oil producer and exporter after the US and Saudi Arabia.Unlike many other oil exporters, Russia doesn't rely on the Strait of Hormuz for oil shipments. That has made the energy giant one of the few beneficiaries of the recent disruption to global oil markets.The problem is that Russia's economy has little room to expand, limiting how much the oil windfall can translate into faster growth, Clemens Grafe, an economist at Goldman Sachs, wrote in a Tuesday note."Despite the weak growth and funding being available to boost the economy, we do not forecast a demand-driven acceleration," Grafe wrote.Goldman expects Russia's economy to grow just 0.9% this year. That's a slowdown from the 1% and 4.3% growth recorded in 2024 and 2025, respectively.Even so, the country's oil windfall is substantial.