How can Russian President Vladimir Putin afford the direct and indirect costs of a new war in Ukraine? It’s simple – he’s been preparing for years. Russia’s central bank reserves now stand at $640 billion, a record. This pile is equivalent to 17 months of Russian export earnings and continues to grow thanks to rising oil prices.

Russia exports about 5 million barrels of crude oil per day plus 2.5 million barrels of refined petroleum products, according to Cowen & Company, accounting for about 10% of the world’s oil trade. As Brent crude hit an 8-year high of $88.88 this morning, that’s more than $600 million a day in petro-cash.

Add to that 23 billion cubic feet of natural gas exports per day (of which about 2 billion cubic meters now flow through Ukraine) – worth another $400 million a day at today’s elevated European prices.

Importantly, it is no longer appropriate to refer to Russia’s fossil fuel income as “petrodollars” given that Putin has worked hard to “dedollarize” the Russian economy. As early as 2013, Russia received dollars for 95% of its exports to Brazil, India, South Africa and China. Today, after a decade of de-dollarization, only 10% of that trade is in greenbacks, according to the Congressional Research Service.

And Putin has created new payment processing systems to replace SWIFT, the Society for Worldwide Interbank Financial Telecommunication (from which Biden has threatened to cut Russia off); In 2015, following US sanctions, Moscow launched the payment platform Mir (now even linked to Apple Pay).

Putin has increasingly replaced dollar trading with gold. From a record low of $2 billion in gold in 1995, Russia has amassed a mountain of it – now worth $130 billion, or 20% of total reserves. That equates to about 72 million 1 ounce. gold coins or 4.5 million pounds. Only the US, Germany and Italy hold more gold.

Although Russia itself mines a lot of gold, platinum and palladium, part of the bunch could come from friends like Venezuela, which reportedly loaded 20 tons of it onto a Russian Boeing 777 in 2019, part of a liquidation of about 300 tons from Caracas coffers.