Russia’s oil export machine is showing fresh strain, as Ukrainian strikes on critical loading infrastructure and a tightening sanctions net combine to push key export volumes to record lows — even as elevated global oil prices from the separate Iran conflict have offered Moscow a partial, and increasingly fragile, offset.

Loadings Collapse at Key Ports

The clearest sign of the pressure is at Tuapse, a Black Sea port that has been under sustained drone attack since May and loaded almost no oil products for a second consecutive month in July, according to the Centre for Research on Energy and Clean Air’s monthly tracking of Russian fossil fuel exports. Loadings at the port fell a further 23% in July to just 4.7 million tonnes — their lowest level on record and less than half the 9.6 million tonnes loaded in July of the previous year.

The disruption intensified following Ukraine’s July 19 drone strike on the Caspian Pipeline Consortium’s marine terminal near Novorossiysk, after which only one oil shipment was loaded between July 22 and 26, with total monthly loadings at the port dropping 23% month-on-month. With refinery throughput still depressed and domestic demand taking priority — jet fuel, diesel, and gasoline all remain under an export ban — the continued slide points to a further fall in oil product revenues in August.

Urals Crude Trades Well Above the Price Cap

Prices tell a more nuanced story. The average price of Russia’s benchmark Urals-grade crude fell 3% month-on-month to $60.22 per barrel in July, still significantly higher than the EU and UK price cap of $44.1 per barrel that took effect in February. The gap between the market price Russia is actually realising and the Western-imposed cap illustrates how the broader oil-market disruption from the separate Iran conflict has, paradoxically, given Moscow more room above the sanctions ceiling than it has enjoyed for much of the past two years.

That relief has been substantial in dollar terms. Oil export earnings rose from an average of $10.4 billion per month in January-February to $19.1 billion in March, $21.5 billion in April, and $20.8 billion in May, according to a mid-year assessment by the Kyiv School of Economics Institute, as the Iran war’s disruption to global energy flows lifted prices broadly and, by extension, Russian revenue even as sanctions architecture remained largely unchanged.

Sanctions Circumvention Under Scrutiny

Enforcement efforts continue to target the shadow fleet and its supporting ecosystem. The Georgian port of Kulevi — whose refinery has run solely on Russian crude and has not received a single shipment of non-Russian crude since opening operations in October 2025 — has said it will stop accepting Russian oil as of August or September, after a new sanctions package introduced a transaction ban on the refinery for processing and trading Russian crude, effective after a six-month wind-down period. CREA’s analysis suggests Kulevi and the nearby port of Batumi have been exporting refined products suspected of containing Russian-origin molecules to jurisdictions that maintain sanctions on Moscow.

Washington Escalates With a New Sanctions Bill

The pressure from Washington has grown more concrete as well. The US Senate passed legislation dubbed the “Lindsey O. Graham Sanctioning Russia and Iran Act of 2026,” which sets up to 100% tariffs on major nations importing Russian oil and gas. The bill’s supporters argue it will have a ripple effect across Russia’s economy by deterring countries from trading with Moscow, given that Russia’s fossil fuel exports earn the country roughly 734 million euros a day and remain the central pillar of its war financing.

Russia’s embassy in Washington has condemned the legislation, pointing to the knock-on energy constraints already caused by the US-Israel war on Iran and warning that further sanctioning of Russia’s trading partners risks compounding an “impending energy crisis” ahead of US midterm elections.

The Bigger Fiscal Picture

Even with the Iran-war windfall, Russia’s broader economic trajectory remains under pressure. Growth is projected at just 0.4% for 2026, worse than the 1% recorded in 2025, and authorities have moved to hike taxes — including raising VAT from 20% to 22% — to shore up a budget strained by continued military spending. Analysts at KSE Institute frame the coming months as a fork in the road: a prolonged global oil crisis would continue supporting Russian export and budget revenues without resolving the domestic fuel crisis, while a faster return of the oil market to surplus would expose Russia more fully to lower revenues and mounting fiscal pressure.

Key Takeaways

• Ukrainian drone strikes on Novorossiysk and Tuapse have pushed Russian oil product loadings to record lows in July.
• Urals crude averaged $60.22 a barrel in July, still well above the $44.1 Western price cap, thanks to the separate Iran-war oil-price shock.
• Russian oil export earnings roughly doubled from January-February levels through the spring, even as sanctions enforcement tightened elsewhere.
• The US Senate passed a bill threatening up to 100% tariffs on countries importing Russian oil and gas.
• Russia’s own 2026 growth forecast stands at just 0.4%, with authorities raising VAT to shore up war-strained public finances.

Frequently Asked Questions

Why have Russian oil exports fallen at key ports? Ukrainian drone strikes on the Caspian Pipeline Consortium terminal near Novorossiysk and on the port of Tuapse have severely disrupted loadings, pushing volumes to record lows in July 2026.

Why is Russia’s Urals crude trading above the Western price cap? The Iran war’s disruption to global oil markets has lifted prices broadly, allowing Russia to sell Urals crude at $60.22 a barrel — well above the $44.1 EU/UK price cap — despite ongoing sanctions.

What new US legislation targets Russian oil buyers? The US Senate passed the “Lindsey O. Graham Sanctioning Russia and Iran Act of 2026,” which authorizes tariffs of up to 100% on countries that import Russian oil and gas.

The human and commercial toll of the conflict choking the Strait of Hormuz came into sharp focus this month as the UAE’s state oil company confirmed a mounting tally of attacks on its shipping fleet — and Emirati officials took their case for reopening the waterway to the international stage in Jaipur.

Fifteen Vessels, One Fatality, Twenty Injuries

The Abu Dhabi National Oil Company said it “continues to be significantly impacted by unprovoked attacks on its assets and employees,” disclosing that 15 of its vessels have been attacked by missiles and drones while transiting the Strait of Hormuz since the conflict began, including three vessels in a single week. The company said the attacks have resulted in one fatality and 20 injuries among crew members.

The pattern has escalated sharply in recent days. On the evening of August 13, two ADNOC vessels were attacked while transiting the strait, with no injuries reported, according to the UAE’s state news agency WAM. That followed an incident days earlier in which the UAE accused Iran’s Revolutionary Guard Corps of striking an ADNOC tanker with a missile, an act Abu Dhabi’s foreign ministry labelled “piracy” and a “direct threat to the stability of the region, its peoples, and the global energy supply”.

Diplomatic adviser to the UAE president Anwar Gargash said Abu Dhabi would defend its sovereignty and interests while continuing to prioritise diplomatic options, a balancing act between deterrence and de-escalation that has defined the UAE’s posture throughout the conflict.

Taking the Case to BRICS

The UAE elevated its concerns onto a multilateral stage at the 2026 BRICS Trade Ministers Meeting in Jaipur, India. Minister of Foreign Trade Dr Thani Al Zeyoudi underscored the UAE’s grave concerns over Iran’s attacks on commercial shipping and reiterated the call for the strait’s immediate and unconditional reopening, invoking the protection of freedom of navigation under international law. Notably, trade ministers at the summit were unable to reach consensus on a joint declaration — a sign of how divisive the Iran conflict has become even within a bloc that includes Russia and China, both of which maintain complex relationships with Tehran.

Regional solidarity has been swift and vocal. The Gulf Cooperation Council’s Secretary-General Jassim Mohammed al-Budaiwi condemned one of the recent strikes as a “dangerous and unacceptable escalation”, while Qatar separately rejected the use of the strait as a “bargaining chip.”

Why the Strait Still Matters

About a fifth of the world’s oil and liquefied natural gas passed through the Strait of Hormuz before the conflict began, a chokepoint for a large share of the world’s seaborne oil. Since the outbreak of the US-Israeli war with Iran on February 28, shipping through the corridor has been repeatedly disrupted, and freight and insurance costs for tankers transiting the route have climbed accordingly.

The UK Maritime Trade Operations agency has also logged separate incidents, including a bulk carrier struck by an unknown projectile in the strait — a reminder that ADNOC’s fleet, while the most visible target given the UAE’s high public profile in the dispute, is not the only shipping affected.

The Economic Stakes for Abu Dhabi and Dubai

The disruption arrives at an inconvenient moment for the UAE, whose non-oil economy has otherwise been a standout performer this year. Dubai’s preliminary Economic Survey 2026 showed GDP rising to roughly $264.7 billion in 2025, with employment reaching 4.69 million, while forecasters including Emirates NBD have projected Dubai’s economy will expand 4.5% in 2026, powered by tourism, population growth, and private-sector investment.

But the oil side of the ledger tells a more troubled story. Economists at FocusEconomics have noted that UAE crude output fell by about a third annually during the worst months of the Hormuz disruption, before partially rebounding on a temporary US-Iran truce. Continued attacks on the strait threaten to reopen that wound just as the non-oil economy has been carrying growth largely on its own.

What Comes Next

With a seventh round of separate US-mediated diplomacy already underway on the Israel-Hezbollah front and no resolution yet in sight on Hormuz specifically, the UAE finds itself managing a war economy on two fronts: absorbing direct attacks on its national oil champion while its diplomats work multilateral channels — from BRICS to the GCC — to build pressure for a reopening that has so far proven elusive.

Key Takeaways

• ADNOC reports 15 vessels attacked since the conflict began, with one crew fatality and 20 injuries.
• The UAE raised the issue at the 2026 BRICS Trade Ministers Meeting in Jaipur, calling for the strait’s immediate, unconditional reopening.
• Trade ministers failed to reach consensus on a joint BRICS declaration, reflecting divisions over the Iran conflict.
• About a fifth of global seaborne oil and LNG normally transits the strait, and continued attacks threaten to reverse UAE oil-output gains made during a temporary truce.

Frequently Asked Questions

How many ADNOC vessels have been attacked in the Strait of Hormuz? ADNOC has reported 15 vessels attacked by missiles and drones since the start of the conflict, resulting in one fatality and 20 injuries among crew members.

What did the UAE ask for at the BRICS summit? UAE Minister of Foreign Trade Dr Thani Al Zeyoudi called for the immediate and unconditional reopening of the Strait of Hormuz and reaffirmed the need to protect freedom of navigation under international law.

How important is the Strait of Hormuz to global oil supply? Before the conflict, roughly a fifth of the world’s seaborne oil and liquefied natural gas passed through the strait, making it one of the most critical chokepoints in global energy trade.

Pakistan’s economy delivered its strongest performance in four years in fiscal year 2025-26, with real GDP growing 3.7% even as the benchmark KSE-100 index shattered previous records — a combination that officials are framing as validation of the reform path pursued since the country’s latest IMF programme began.

A Recovery Four Years in the Making

The 3.7% growth rate marks an improvement on the 3.18% recorded the previous fiscal year, though it still falls short of the government’s original 4.2% target for FY26. Per capita income rose to $1,901 from $1,751 the year before, according to the government’s FY26 Economic Survey, while sectoral growth was broad-based: agriculture expanded 2.89%, industry 3.51%, and services 4.09%.

Finance Minister Muhammad Aurangzeb has pointed to a specific combination of factors behind the turnaround: strong corporate earnings, a declining policy rate, falling inflation, and the successful completion of IMF-EFF programme reviews, which together helped stabilise the macroeconomic environment and restore investor confidence after several years of crisis-mode policymaking.

KSE-100’s Record Run

The Pakistan Stock Exchange has been the most visible beneficiary of that stabilisation. The KSE-100 closed at a record 180,301 points, a gain of more than 43% over the fiscal year, with the number of active investors on the exchange climbing nearly 50% to over 583,000. Market capitalisation on the exchange rose from Rs15,237 billion to Rs16,534 billion between June 2025 and March 2026 alone, an increase of roughly Rs1,298 billion, or 8.5%, in just nine months.

That rally reflects a broader re-rating of Pakistani equities as the IMF-EFF programme has proceeded through successive tranche disbursements without the disruptions that derailed earlier attempts at fiscal consolidation.

Remittances Remain the External-Account Anchor

Workers’ remittances continue to do the heavy lifting on Pakistan’s external account. Inflows rose 8.2% to $30.3 billion during the July-March period of FY26, and the momentum has carried into the new fiscal year: overseas Pakistanis sent $3.631 billion in July 2026 alone, up 13% year-on-year and 4.5% month-on-month, according to State Bank of Pakistan data that Prime Minister Shehbaz Sharif publicly welcomed as “highly encouraging.”

Saudi Arabia and the UAE remain the two largest source countries, though the reliance on remittances rather than export growth has drawn scrutiny from economists. A structural current account surplus of $72 million during July-March FY26 — down sharply from a $1.7 billion surplus in the same period a year earlier — underscores that the underlying trade position has actually weakened even as remittance-driven headline figures look strong.

The Dutch Disease Debate

Not every economist is celebrating the remittance dependency uncritically. Pakistan received roughly $95.8 billion in remittances between FY2023 and FY2025, compared with $91 billion in merchandise exports over the same period — a reversal of the traditional growth model built on export competitiveness. Research cited in Pakistani economic commentary suggests that once the remittance-to-GDP ratio exceeds roughly 6%, it can begin to exacerbate deindustrialisation and slow capital accumulation, a pattern economists have labelled a symptom of Dutch disease.

Aurangzeb has pushed back on the more alarmist framing, arguing that remittances are and will remain a critical structural component of Pakistan’s external balancing position, while acknowledging the need to simultaneously grow exports rather than treat the two as substitutes.

Looking Ahead to FY27

The government has set a 4% GDP growth target for FY2026-27 and aims to narrow the fiscal deficit further to 3.6% of GDP. Officials are pointing to continued fiscal discipline, record remittance inflows, expanding technology exports, and renewed foreign investment as the pillars expected to sustain the recovery into the new fiscal year — though the labour-migration data offers a more cautious signal: roughly 50,000 workers left for the UAE on work visas in Jan-July 2026, down from 52,000 in the same period of 2025 and 64,000 in 2024, suggesting the remittance engine itself may not accelerate indefinitely.

Key Takeaways

• Pakistan’s economy grew 3.7% in FY26, the fastest pace in four years, though short of the 4.2% target.
• The KSE-100 index closed the fiscal year at a record 180,301 points, up more than 43%, with active investors up nearly 50%.
• Workers’ remittances hit $3.63 billion in July 2026 alone, up 13% year-on-year, extending a run that has become the economy’s key external stabiliser.
• Economists continue to warn that heavy reliance on remittances over exports carries long-term Dutch disease risks.
• The government targets 4% growth and a narrower 3.6% fiscal deficit for FY27.

Frequently Asked Questions

How fast did Pakistan’s economy grow in FY26? Pakistan’s GDP grew 3.7% in fiscal year 2025-26, its fastest pace in four years, though below the government’s 4.2% target.

What record did the KSE-100 index set? The KSE-100 closed the fiscal year at a record 180,301 points, gaining more than 43% over the year, with the number of active exchange investors rising nearly 50% to over 583,000.

Why are economists concerned about Pakistan’s reliance on remittances? Remittances have outpaced merchandise exports in recent years, and when the remittance-to-GDP ratio rises too high, economists warn it can discourage industrial development — a pattern known as Dutch disease.