Putin wants to keep fighting Ukraine but faces major problem, The Telegraph reports
Illustrative photo: falling oil revenues push Russia into crisis (Getty Images)
Russian oil is being sold at an unprecedented discount, increasingly undermining Russia’s financial base. However, Russian leader Vladimir Putin is showing readiness to continue the war in Ukraine, according to The Telegraph.
The average price of Russia’s Urals crude in January fell to about $37.5 per barrel — nearly 42% cheaper than the Brent benchmark. The decline is the result of tighter sanctions, logistical complications, and reduced purchases by key buyers, including India.
"Indian imports of Russian crude dropped to 1.1 million barrels a day during the month, the lowest since November 2022," the outlet says.
This is critical for Russia’s budget, as oil revenues remain the main source of war financing. An additional blow came from US sanctions against energy giants Rosneft and Lukoil, as well as new EU restrictions on maritime shipments of Russian crude oil.
“If this continues, it poses big problems for Putin, as a key part of the strategy to keep the domestic economy afloat is the use of strong oil export revenues,” Steffen Dietel of Altana Wealth told the outlet.
Under mounting restrictions, exports are shrinking, and foreign currency inflows are declining, increasing financial pressure on the economy. Experts estimate that Russian oil supplies have already dropped noticeably.
Further weakening demand is forcing Moscow to sell crude at even lower prices to retain markets. This reduces the Kremlin’s budgetary capacity and complicates war financing.
Despite falling revenues and rising inflationary pressure, Russian authorities are attempting to support the economy through monetary stimulus. Analysts believe, however, that even the worsening economic situation has not yet prompted the Kremlin to change its strategic course — the war remains a priority despite the gradual depletion of financial resources.
As of February, despite steep oil discounts, Russia’s budget revenues from oil sales have dropped to a minimum. In January, they fell to their lowest level in more than five years.
As a result, the Russian economy is entering its deepest crisis in the past 20 years, which could force the Kremlin to reconsider the economic policy formed in the early 2000s.
