Russia's oil and gas revenues, a key source of funding for its war in Ukraine, have fallen sharply to multi-year lows as the fourth anniversary of the full-scale invasion approaches. The decline is attributed to new sanctions from the US and EU, tariff pressure from US President Donald Trump on India, and a crackdown on the shadow fleet of tankers used to evade existing restrictions.
In January, Russian state revenues from oil and gas taxes dropped to 393 billion rubles ($5.1 billion), down from 587 billion rubles ($7.6 billion) in December and from 1.12 trillion rubles ($14.5 billion) in January 2025. Janis Kluge, an expert on the Russian economy at the German Institute for International and Security Affairs, noted this is the lowest level since the Covid-19 pandemic.
The Trump administration imposed sanctions on Russia's two largest oil companies, Rosneft and Lukoil, from 21 November, threatening to cut off buyers from the US banking system. On 21 January, the EU began banning fuel made from Russian crude, preventing it from being refined elsewhere and shipped to Europe. Ursula von der Leyen, head of the EU's executive commission, proposed a full ban on shipping services for Russian oil, stating that sanctions offer leverage to push Russia to halt fighting.
These measures go beyond the $60 per barrel price cap imposed by the G7 under the Biden administration, which aimed to reduce Russia's profits without banning imports. The cap initially reduced revenues, but Russia circumvented it by building a shadow fleet of aging tankers. The latest sanctions target this fleet, with the US, UK, and EU now sanctioning 640 individual vessels.
Trump also pressured India to reduce Russian oil imports by lowering tariffs from 25% to 18% on 3 February, after Indian Prime Minister Narendra Modi agreed to halt Russian crude imports. While Kremlin spokesman Dmitry Peskov reaffirmed Russia's commitment to its partnership with New Delhi, Indian shipments of Russian oil have declined from 2 million barrels per day in October to 1.3 million in December. Data firm Kpler noted that India is unlikely to fully disengage from cheap Russian energy in the near term.
The revenue drop is forcing President Vladimir Putin to borrow from Russian banks and raise taxes, straining a war economy already facing slowing growth and inflation. Ukrainian strikes have also hit Russian refineries, pipelines, and export terminals, further disrupting oil exports.
