Why Does the Ruble Fall When Oil Rises? The Political Economy of a Weak Ruble | The Trends

26 Mar, 2026
| Salome K

Why is the Ruble Falling When Oil is Rising? Or, A Short Course in Applied Political Economy for Those Who Still Believe in the Market Fairy

Global Events
March 2026

The question sounds like a mockery of basic economics. Oil is our everything. Oil goes up — the ruble should strengthen. This is an axiom that has been drilled into us by television screens for the last twenty years.

And then suddenly — March 2026. Brent breaks through record highs amid escalating tensions in the Middle East, while the ruble… crawls downward. People look at the charts and don’t understand: are the instruments lying, or has the world gone mad?

The world hasn’t gone mad. The world has simply become more complex. And the old formulas no longer work because the architecture of the system has changed.

Let’s break down this architecture slowly, without hysteria, with numbers and tables. Because this topic, especially now, is extremely slippery. But it is precisely in moments like these that the ability to separate the wheat from the chaff, truth from lies, medicine from poison becomes a matter of survival. Not so much biological survival — not yet — but survival as a thinking person in an era of forced dehumanization.

Part 1. Anatomy of a Paradox: Why Oil No Longer Moves the Ruble

The classic link of “expensive oil = strong ruble” didn’t break yesterday. It has been breaking down over the last three years; we are simply now seeing the final collapse of the mechanism. There are several reasons, and they are all systemic.

1. The Brent–Urals Spread (Sanctions Discount)

Indicator	Description of the Situation
Market Benchmark	Brent (the global standard)
Russian Reality	Urals is sold at a discount.
Situation in March 2026	Brent rises due to geopolitics, but buyers of Urals (limited options, sanctioned tanker fleet) price it with these risks in mind.
Conclusion	Actual export revenue increases slowly, and sometimes even falls.

2. The Budget Rule is Dead. Long Live Manual Control.

Regime	Before	Now (March 2026)
Mechanism	Oil above $40–45 → Ministry of Finance buys currency → ruble strengthens.	Budget is based on 90–95 RUB/USD.
Logic	Smoothing out volatility.	The Ministry benefits from a weak ruble (exporters’ taxes in rubles yield higher budget revenue).
Action	Automatic interventions.	When oil rises, the Ministry reduces or halts interventions. The ruble loses support.

3. Imports Have Come Back to Life and Are Hungry

Period	Import Situation	Impact on Ruble
2022–2023	Imports collapsed, logistics disrupted.	Low demand for foreign currency → ruble is strong (artificially).
March 2026	Imports have recovered (partially, via “gray” schemes).	Companies need dollars and yuan → demand for currency rises → ruble falls.

4. Geopolitics and Nerves

Factor	Reaction	Consequence
New sanctions, asset freezes	Citizens convert savings into currency.	Panic buying on the exchange.
Business	Large-scale capital outflow, buying currency “for peace of mind.”	Upward pressure on the exchange rate.

Part 2. Mechanisms of Influence: Who Moves the Exchange Rate and How

Now let’s look at the specific tools shaping the ruble exchange rate right now.

🏛️ The Domestic Market: Moscow Exchange

Factor	How It Works	Impact on Exchange Rate
Ministry of Finance Actions	Pause on currency operations, adjustments to the budget rule.	The ruble loses support, the rate drifts downward.
Exporter Sales	In 2025, exporters sold up to 93% of revenue. Volumes are now decreasing due to lower physical exports and shifts to ruble settlements.	Less currency on the market → its price increases.
Importer Demand	Imports are recovering; companies need currency for purchases.	Pressure on the ruble towards weakening.
Public Behavior	At the first talk of devaluation, people buy currency (Oct 2025 record: RUB 158.6 billion).	Panic demand pushes the rate up.

Interim Conclusion: The domestic market is currently a perfect storm. Demand for currency is rising from all sides, while supply is shrinking. The ruble has no support.

Part 3. Who Benefits? The Political Economy of a Weak Ruble

Textbooks say a strong national currency is a good thing. In reality, it’s more complicated. A weak ruble has powerful lobbyists.

🏆 Who Gains from a Weak Ruble

Sector	Companies	Why It’s Beneficial
Oil & Gas	Surgutneftegaz (prefs), Lukoil, Rosneft	Massive foreign exchange revenue. Surgutneftegaz: its “dollar hoard” appreciates in ruble terms. A 1 RUB/USD weakening increases preferred shares’ dividend yield by almost 1 p.p.
Metals & Mining	Nornickel, Polyus, ALROSA, Rusal	Exports at global prices (currency), costs in rubles. Gold miners get a double benefit (rising gold prices + weak ruble).
Chemicals & Fertilizers	PhosAgro	Pure exporter (~75% of products abroad). A weak ruble helps offset fluctuations in global prices.
State Budget	—	The key beneficiary. Increased tax revenues from exporters when converting foreign currency earnings into rubles.

📉 Who Loses from a Weak Ruble

Sector	Companies	Why They Lose
Construction	PIK, Etalon	Imported materials and equipment become more expensive.
Retail	M.Video, Lenta, Magnit	High share of imports in their assortment; procurement costs rise.
IT & Telecom	MTS, Rostelecom	Dependence on imported hardware and software; infrastructure costs increase.
Population	—	Rising inflation, declining real incomes, imported goods become unaffordable.

Part 4. The Main Paradox: Weak Ruble and Import Substitution

A weak ruble seems to help import substitution: imports become more expensive, and demand shifts to domestic products.

How It Should Work (Theory)

Factor	Mechanism	Result
Imports become expensive	Foreign goods become less accessible.	Demand shifts to Russian alternatives.
Exports become cheaper	Russian goods become more price-competitive abroad.	Producers earn foreign currency and scale up.
Domestic production is stimulated	Vacant niches are filled by local companies.	Increased capacity utilization, job creation.

*Vladimir Potanin recently articulated this logic: the optimal exchange rate is around 90 RUB/USD.*

But There’s a Catch. A Huge Catch: Modern Import Substitution Requires Imports.

Problem	How a Weak Ruble Worsens the Situation
Equipment and technology are imported	Machinery and components are bought with foreign currency. A weak ruble makes them more expensive, raising costs and squeezing margins.
R&D investments become unaffordable	Developing own technology requires massive investment. A weak ruble makes foreign patents/licenses more expensive while devaluing local investment resources.
Critical dependence persists	Replacing outgoing goods often devolves into “shuttle” imports of Chinese and Indian components via gray schemes, multiplying costs.

Part 5. The Deep Conflict: Two Models of the Economy

Essentially, we are witnessing a clash between two logics: the resource-based model, where a weak ruble is a blessing, and the technology-based model, where a weak ruble is a disaster.

Model	Beneficiaries	Attitude to Exchange Rate	Long-Term Consequences
Resource-Based	Oil, gas, metals, state budget	Weak ruble is beneficial	Perpetuation of the resource-based structure, no incentives for modernization.
Technology-Based	High-tech sector, manufacturing, IT	Needs a strong ruble	Incentives for development, R&D investment, global competitiveness.

Developed countries (Germany, Japan) have strong currencies because their economies are strong. We are trying to make the economy strong through a weak currency. Does it work? Tactically, yes. Strategically, no.

Architectural Conclusion

March 2026 will go down in textbooks as the moment the old world finally cracked. The ruble is falling alongside expensive oil not because the market has broken. It’s because there is no market anymore. There is manual control, a balance of elite interests, and rigid fiscal logic.

First. The state has become the main player in the foreign exchange market. A weak ruble is a conscious choice or a forced measure, but certainly not an accident.

Second. Resource companies win, the country loses. A weak ruble benefits a narrow group of exporters and the budget today, but it is detrimental to the economy tomorrow. Perpetuating the resource-based model is a road to nowhere.

Third. Import substitution hits the wall of imports. It’s a paradox that kills any simple solutions. You cannot build complex manufacturing with a weak ruble because machinery and components are bought with foreign currency. You need either a strong ruble or complete import substitution in machine tools. We have neither.

“Kazakhstan is buying Bitcoin while Bloomberg buries Bitcoin. The ruble is falling while oil rises. Developers are moving into AI, while miners are switching their capacity to neural networks. JPMorgan is being tried for aiding a pyramid scheme, while BlackRock launches a staking ETF. Has the world gone mad? No, the world has just become more complex. Welcome to the new reality, where yesterday’s enemies become partners, yesterday’s skeptics become defendants in lawsuits, and economic axioms stop working exactly when you’ve memorized them.”

P.S. This is not an economics textbook. It is an invitation to a conversation. The topic, especially now, is extremely slippery. Therefore, details and feedback are in the usual channels. The ability to think for yourself is becoming not just a trend, but a matter of survival. Do not forget that.

#TheTrends #oilmarket #exchangerate #ruble2026 #financialanalysis

Arthur Bridge