{"id":580402,"date":"2026-02-10T18:19:32","date_gmt":"2026-02-10T18:19:32","guid":{"rendered":"https:\/\/www.europesays.com\/us\/580402\/"},"modified":"2026-02-10T18:19:32","modified_gmt":"2026-02-10T18:19:32","slug":"russias-oil-revenue-is-starting-to-dwindle-due-to-sanctions-over-the-war-in-ukraine","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/580402\/","title":{"rendered":"Russia’s oil revenue is starting to dwindle, due to sanctions over the war in Ukraine"},"content":{"rendered":"

Oil and gas exports have sustained Russia\u2019s finances throughout its war against Ukraine<\/a>. But as the fourth anniversary of the full-scale invasion approaches, those cash flows have suddenly dwindled to lows not seen in years.<\/p>\n

It\u2019s the result of new punitive measures from the U.S. and the European Union, U.S. President Donald Trump\u2019s tariff pressure<\/a> against India, and a tightening crackdown on the fleet of sanctions-dodging tankers carrying Russian oil. <\/p>\n

The drop in revenue is pushing President Vladimir Putin<\/a> to borrow from Russian banks and raise taxes, keeping state finances on an even keel for now. <\/p>\n

But those measures only increase strains in a war economy now plagued by slowing growth and stubborn inflation.<\/p>\n

In January, Russian state revenues from taxing the oil and gas industries fell to 393 billion rubles ($5.1 billion) That\u2019s down from 587 billion ($7.6 billion) in December and from 1.12 trillion ($14.5 billion) in January 2025. That\u2019s the lowest since the COVID-19 pandemic, says Janis Kluge, an expert on the Russian economy at German Institute for International and Security Affairs. <\/p>\n

A new approach to sanctions<\/p>\n

To pressure the Kremlin to halt fighting in Ukraine, the Trump administration imposed sanctions on Russia\u2019s two largest oil companies, Rosneft and Lukoil<\/a>, from Nov. 21. That means anyone buying or shipping their oil runs the risk of being cut off from the U.S banking system \u2014 a serious concern for any multinational business.<\/p>\n

On top of that, on Jan. 21 the EU began banning fuel made from Russia crude \u2014 meaning it could no longer be refined somewhere else and shipped to Europe in the form of gasoline or diesel fuel.<\/p>\n

The head of the EU\u2019s 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. \u201cWe must be clear-eyed: Russia will only come to the table with genuine intent if it is pressured to do so,\u201d she said.<\/p>\n

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\u2019s profits, not banning imports, out of concern over higher energy prices.<\/p>\n

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 \u201cshadow fleet\u201d<\/a> of aging tankers operating beyond the reach of the cap, and revenues rose again.<\/p>\n

Pressure on India to stop Russian oil imports<\/p>\n

Trump on Feb. 3 agreed to lower tariffs<\/a> to 18% from 25%, saying Indian President Narendra Modi agreed to halt Russian crude imports, and on Friday removed an additional 25% tariff imposed over continued imports of Russian oil. <\/p>\n

Modi hasn\u2019t commented. Foreign affairs spokesman Randhir Jaiswal said India\u2019s strategy was \u201cdiversifying our energy sourcing in keeping with objective market conditions.\u201d Kremlin spokesman Dmitry Peskov noted that Moscow was monitoring the statements and remains committed to our \u201cadvanced strategic partnership\u201d with New Delhi.<\/p>\n

In any case, Russian oil shipments to India have declined in recent weeks, from 2 million barrels per day in October to 1.3 million per day in December, according to figures from the Kyiv School of Economics and the U.S. Energy Information Administration. Data firm Kpler says \u201cIndia is unlikely to fully disengage in the near term\u201d from cheap Russian energy.<\/p>\n

Ukraine\u2019s allies increasingly have sanctioned individual shadow tankers to deter customers from taking their oil \u2014 raising the number to 640 among the U.S., U.K. and EU. U.S. forces have seized vessels linked to sanctioned Venezuelan oil, including one sailing under a Russian flag, while France briefly intercepted a suspected shadow fleet vessel. Ukrainian strikes have hit Russian refineries, pipelines, export terminals and tankers. <\/p>\n

Russian oil is trading at a steep discount<\/p>\n

Buyers are now demanding bigger discounts on Russian oil to compensate for the risk of running afoul of U.S. sanctions and the hassle of finding payment workarounds that skirt banks reluctant to touch the transactions. The discount widened to about $25 per barrel in December, as Russia\u2019s primary crude export, Urals blend, fell below $38 per barrel, compared with about $62.50 per barrel for international benchmark Brent crude.<\/p>\n

Since Russia\u2019s taxes on oil production are based on the price of oil, that cuts into state revenues.<\/p>\n

\u201cIt\u2019s a cascading or domino effect,\u201d said Mark Esposito, a senior analyst focused on seaborne crude at S&P Global Energy. Including diesel and gasoline created \u201ca really a dynamic sanctions package, a one-two punch that are impacting not only the crude flow, but the refined product flow off of those barrels. … A universal way of saying, if it\u2019s coming from Russian crude, it\u2019s out.\u201d<\/p>\n

Reluctance to take delivery has meant an inordinate amount \u2014 about 125 million barrels \u2014 has built up in tankers at sea. That has driven up costs for scarce capacity, with rates for very large oil tankers reaching $125,000 per day \u201cand that\u2019s directly correlated with the ramifications of the sanctions,\u201d said Esposito.<\/p>\n

Slowing growth strains Russia\u2019s budget<\/p>\n

On top of that, economic growth has stalled as the boost from war-related spending reaches its limits and as labor shortages put a cap on potential business expansion. And lower growth means less tax revenue. Gross domestic product increased only 0.1% in the third quarter. Forecasts for this year range between 0.6% and 0.9%, down from over 4% in 2023 and 2024. <\/p>\n

\u201cI think the Kremlin is worried about the overall balance of the budget, because it coincides with the economic downturn,\u201d said Kluge. \u201cAnd at the same time the costs of the war are not decreasing.\u201d<\/p>\n

The Kremlin responds by raising taxes and borrowing<\/p>\n

The Kremlin has resorted to higher taxes<\/a> and borrowing to fill the gap left by dwindling oil revenues and by slower economic growth. The Kremlin-controlled parliament, the Duma, raised value-added tax paid on consumer purchases at the cash register to 22% from 20% and increased levies on car imports, cigarettes and alcohol. The government has increased its borrowing from compliant domestic banks. And a national wealth fund still has reserves to patch budget holes.<\/p>\n

So the Kremlin has money \u2014 for now. But raising taxes can slow growth even more. And borrowing risks worsening inflation, brought down to 5.6% through interest rates of 16% from the central bank, down from a peak of 21%.<\/p>\n

\u201cGive it six months or a year, and it could also affect their thinking about the war,\u201d said Kluge. \u201cI don\u2019t think they will seek a peace deal because of this, but they might want to lower the intensity of the fighting, focus on certain areas of the front and slow the war down. This would be the response if it\u2019s getting too expensive.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Oil and gas exports have sustained Russia\u2019s finances throughout its war against Ukraine. But as the fourth anniversary…\n","protected":false},"author":3,"featured_media":580403,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[5],"tags":[13214,64,37325,69,10102,440,11289,57,1567,13790,92268,251821,19720,50,251820,257,3658,235115,16524,16618,226624,273,2856,274,103,107],"class_list":["post-580402","post","type-post","status-publish","format-standard","has-post-thumbnail","category-world","tag-asia-pacific","tag-business","tag-dmitry-peskov","tag-donald-trump","tag-energy-industry","tag-europe","tag-finance-business","tag-general-news","tag-india","tag-international-trade","tag-janis-kluge","tag-mark-esposito","tag-narendra-modi","tag-news","tag-randhir-jaiswal","tag-russia","tag-russia-government","tag-send-to-apple-news","tag-south-asia","tag-tariffs-and-global-trade","tag-u-s-venezuela-conflict","tag-ukraine","tag-ursula-von-der-leyen","tag-vladimir-putin","tag-world","tag-world-news"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/116047718978417396","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/580402","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=580402"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/580402\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/580403"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=580402"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=580402"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=580402"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}