Russia’s economic woes are creating opportunities for investors from the UAE to put money to work.
Traders in the Gulf state have ramped up business in Russian oil and gold markets, the WSJ reported.
Conversely, Russians are flocking to the UAE, bringing their wealth to its economy and sparking a real estate boom.
Russia’s difficult economic situation has resulted in deepening ties between the nation and the United Arab Emirates, which is seeing a cash from the warring country flood into its markets and economy.
But Russia is still selling plenty of oil, offering hefty to discounts to “friendly” nations who are gorging on cheap Russian crude. The markdowns have led UAE traders to snap up more discounted Russian oil and gold than ever before and ushering in a huge amount of wealth to the Middle Eastern nation.
The UAE purchased a record 60 million barrels of Russian oil last year, according to Kpler data cited by the Wall Street Journal on Monday. Meanwhile, its purchases of Russian gold soared to $4 billion from February 2022 to March of this year, up from just $61 million in 2021, ImportGenius data shows.
Meanwhile, Russians fleeing their country amid Putin’s war in Ukraine has resulted in the UAE seeing an influx of immigrants, among them wealthy Russian oligarchs, who are flooding the local market with cash and investment capital. Foreign currency flowing into the country has grown about 20% per month since May of last year, Capital Economics data shows.
Wealthy Russian immigrants are also fueling Dubai’s hot housing market. Russians were the third-largest group of real estate buyers in Dubai over the last quarter, the real estate firm Betterhomes told the Journal, up from the ninth-largest group in 2021.
Russia’s economy meanwhile is in a state of turmoil. The nation’s oil and gas revenue has crashed about 50%, Russia’s finance ministry said in February. The Kremlin is also grappling with a $42 billion budget deficit as it tries to square the growing costs of its “special military operation” in Ukraine.
Experts say the shift in capital from Russia to neighboring countries like Poland and further afield to places like the UAE will continue over the long run as trust in Putin to better the lives of Russian citizens deteriorates. Wealthy oligarchs and everyday Russian workers likely aren’t coming back to the nation even after war in Ukraine ends, two Yale researchers told Insider.