Russia’s crucial oil and gas revenues, which have sustained its war against Ukraine, have suddenly dwindled to multi-year lows as the fourth anniversary of the full-scale invasion approaches.
This sharp decline is the result of new punitive measures from the US and the European Union, tariff pressure from US President Donald Trump against India, and a tightening crackdown on the fleet of sanctions-dodging tankers carrying Russian oil.
The resulting revenue drop is forcing President Vladimir Putin to borrow from Russian banks and raise taxes.
While these measures are currently keeping state finances “on an even keel”, they only increase strains in a war economy now plagued by slowing growth and stubborn inflation.
In January, Russian state revenues from taxing the oil and gas industries fell to 393 billion rubles (US$5.1 billion). This is down from 587 billion rubles ($7.6 billion) in December and from 1.12 trillion ($14.5 billion) in January 2025.
Janis Kluge, an expert on the Russian economy at the German Institute for International and Security Affairs, says this is the lowest level since the Covid-19 pandemic.
In January, Russian state revenues from taxing the oil and gas industries fell to 393 billion rubles ($5.1 billion).
That’s down from 587 billion ($7.6 billion) in December and from 1.12 trillion ($14.5 billion) in January 2025. That’s the lowest since the COVID-19 pandemic, says Janis Kluge, an expert on the Russian economy at German Institute for International and Security Affairs.
To pressure the Kremlin to halt fighting in Ukraine, the Trump administration imposed sanctions on Russia’s two largest oil companies, Rosneft and Lukoil, from 21 November. That means anyone buying or shipping their oil runs the risk of being cut off from the U.S banking system — a serious concern for any multinational business.
On top of that, on 21 January, the EU began banning fuel made from Russia crude — meaning it could no longer be refined somewhere else and shipped to Europe in the form of gasoline or diesel fuel.
The head of the EU’s executive commission, Ursula von der Leyen, on Friday proposed a full ban on shipping services for Russian oil, saying sanctions offered leverage to push Russia to halt the fighting. “We must be clear-eyed: Russia will only come to the table with genuine intent if it is pressured to do so,” she said.
The latest sanctions are a step beyond the oil price cap imposed by the Group of Seven democracies under the Biden administration. The $60 per barrel cap, enforced through insurers and shippers based in G-7 countries, was aimed at reducing Russia’s profits, not banning imports, out of concern over higher energy prices.
The cap did reduce government oil revenues temporarily, especially after an EU ban on most Russian seaborne oil forced Russia to shift sales to China and India.
But Russia built a “shadow fleet” of aging tankers operating beyond the reach of the cap, and revenues rose again.
