Russia is still shipping out large volumes of oil despite fresh US sanctions, but the financial picture behind those exports is deteriorating fast, and the consequences are hitting Moscow’s war chest.
A new Goldman Sachs analysis shows that even after Washington sanctioned oil giants Lukoil and Rosneft in late October, Russia’s total exports barely moved. Seaborne shipments from the sanctioned firms plunged 42% to around 1.7 million barrels a day, yet overall exports dipped by only 100,000 barrels per day. Moscow quickly rerouted supplies through smaller, non-sanctioned producers, keeping barrels flowing even as pressure mounted.
But behind the stable export numbers lies a sharp collapse in revenue.
Goldman’s analysts say Russia’s oil export earnings in rubles have crashed by 50% this year, falling from the equivalent of 7.6% of GDP to 3.7%. The country’s Finance Ministry has confirmed the slide, reporting a 34% year-on-year drop in oil and gas tax income, one of the Kremlin’s most crucial funding streams.
The squeeze is being driven by a stronger ruble, falling Brent prices and widening discounts on Russian crude as buyers demand steeper cuts to navigate sanctions exposure. That means Russia must sell more oil just to earn significantly less.
This divergence, stable exports but evaporating revenue, has major implications for the war in Ukraine. Oil and gas typically make up more than a third of Russia’s federal budget. But as defense spending surges and weapons production expands, the funds to sustain the war are shrinking.
Ukraine’s intensifying drone strikes on Russian energy infrastructure have added a new layer of risk. Even so, global oil markets have barely reacted, with Brent prices largely unmoved, keeping Russia’s sale prices depressed and compounding the fiscal strain.
Diplomatic efforts to end the nearly four-year conflict remain stalled. A five-hour meeting between Vladimir Putin and envoys representing Donald Trump yielded no compromise on a peace deal, the Kremlin said on Wednesday.
