  Oil price fluctuations severely impact the economies of both oil-exporting
and importing countries. High oil prices can benefit oil exporters by
increasing foreign currency inflow; however, an economy can suffer from a
weakening of the manufacturing sectors and experience a significant downtrend
in the country's price competitiveness as the domestic currency appreciates. We
investigate the oil price fluctuations from Q1, 2004 to Q3, 2021 and their
impact on the Russian macroeconomic indicators, particularly industrial
production, exchange rate, inflation and interest rates. We assess whether and
how much the Russian macroeconomic variables have been responsive to the oil
price fluctuations in recent years. The outcomes from VAR model confirm that
the monetary channel is more responsive to oil price shocks than the fiscal
one. Regarding fiscal channel of the oil price impact, industrial production is
strongly pro-cyclical to oil price shocks. As for the monetary channel, higher
oil price volatility is pressuring the Russian ruble, inflation and interest
rates are substantially counter-cyclical to oil price shocks.
