Russia’s Political Stability Hinges on Oil Prices: Analyst Warns of Elite Revolt Against Putin
Political strategist Taras Zahorodnii has issued a stark warning that Russia’s ruling elite could move to oust President Vladimir Putin if global oil prices plummet to catastrophic levels, underscoring the precarious link between the Kremlin’s power and the nation’s energy-dependent economy. In a recent commentary for the RBC-Ukraine YouTube channel, Zahorodnii argued that a sustained collapse in oil revenues might fracture the loyalty of Russia’s oligarchs and political leaders, who rely on hydrocarbon profits to sustain the state’s stability and their own fortunes.
Oil Prices as a Trigger for Regime Change
Zahorodnii emphasized that Putin’s aggressive policies, particularly his wartime strategies in Ukraine, are viable only as long as Russia’s economy remains buoyed by energy exports. “As long as Putin is in power, he’ll keep acting aggressively to the end. But when oil prices crash, the elites will start talking about getting rid of this lunatic and doing what’s necessary,” the analyst stated. He identified $30 per barrel as a critical threshold—a scenario that would cripple Russia’s budget, which depends heavily on oil and gas revenues to fund everything from social programs to military operations.
Russia’s federal budget, already strained by Western sanctions and wartime expenditures, requires substantial oil revenues to subsidize regions and maintain public loyalty. Many of these regions, particularly remote or economically underdeveloped areas, depend on federal subsidies to function. Zahorodnii warned that without these funds, discontent could escalate, prompting regions to question their allegiance to Moscow. “If subsidies dry up, some territories might wonder why they need Russia at all,” he noted, alluding to potential fractures in the federation.
Economic Indicators Signal Trouble
The analyst highlighted troubling signs in Russia’s economy, including a decline in rail transport activity—a key indicator of industrial and commercial health. Reduced rail freight volumes suggest slowing economic momentum, even as the government prioritizes military logistics. “Rail transport is declining there. That means things aren’t going so well economically. Even transporting military cargo isn’t seamless,” Zahorodnii observed.
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Compounding these challenges is Russia’s soaring defense spending, which reportedly exceeds levels seen during the Soviet era. Moscow has redirected nearly one-third of its 2024 budget toward defense and the war in Ukraine, a unsustainable trajectory if energy revenues falter. Zahorodnii stressed that a prolonged oil price slump would force painful trade-offs between funding the military and placating a population already grappling with inflation and shortages.
The U.S. Factor and Global Oil Markets
Zahorodnii also pointed to the United States’ strategic awareness of Russia’s economic vulnerabilities. By leveraging sanctions and policies aimed at suppressing global oil prices, the U.S. and its allies could exacerbate pressure on the Kremlin. While Putin has remained defiant, betting on his ability to outlast Western resolve, the analyst cautioned that Russia’s economy lacks the resilience to endure a protracted price war.
As of April 7, Russia’s benchmark Urals crude had already fallen to 100. Though still above Zahorodnii’s $30 danger zone, this decline has narrowed Moscow’s fiscal buffer. Urals has traded at a steep discount to global benchmarks since Western nations imposed price caps and reduced imports, forcing Russia to rely on costlier trade routes to Asia.
Historical Precedents and Elite Loyalty
The threat of elite defection is rooted in Russia’s history. During the 1990s, collapsing oil prices and economic chaos eroded public trust in leaders, culminating in Boris Yeltsin’s resignation. Today’s elites—oligarchs, bureaucrats, and security chiefs—have largely tolerated Putin’s policies in exchange for political stability and wealth preservation. However, a severe economic crisis could unravel this pact, prompting factions to seek alternatives to safeguard their interests.
Zahorodnii’s analysis underscores a pivotal reality: Putin’s grip on power is as much a product of economic pragmatism as political repression. Should oil prices collapse, the Kremlin may face not just economic turmoil, but an existential battle to retain the loyalty of the very elites who underpin its authority. As global energy markets fluctuate, the stakes for Russia’s leadership have never been higher.
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