Sanctions hit the Kremlin hard as Russia's oil export revenues plunge

In November, the gap between Brent crude, which is currently trading at its lowest level since 2021, and Russia’s benchmark Urals oil doubled.

The discount widened to more than $24 a barrel, compared with about $15 over the previous two years, FT calculations based on Argus data show. Combined with low prices, this cut Russia’s energy revenues in 2025 by about one-fifth of annual income.

This shift underscores how sanctions imposed by the administration of US President Donald Trump are undermining Russia’s oil revenues.

The budget deficit is certainly an important issue for Russia right now, said Janis Kluge, a Russia expert at the German Institute for International and Security Affairs.

According to him, oil has long accounted for a larger share of Russia’s energy revenues than gas, and this gap has widened due to the loss of the European gas market in 2022, making revenues more dependent on oil price fluctuations.

For some recent deliveries to India, the price fell as low as $22–25 a barrel, barely covering Russia’s break-even price.

Economic consequences

According to analysts, a $10 deviation of the average Urals oil price from the budget assumption would wipe out revenues of 1.5–1.8 trillion rubles.

If low oil prices and a strong ruble persist, the deficit could reach about 3 trillion rubles by the end of the year, which is roughly 7.5% of the revenues Moscow expects in 2026.

In addition, sanctions have reduced the share of energy revenues in the overall budget from 50% at the peak of their growth to about 24% — the lowest level in at least a decade. To compensate for the shortfall, the Kremlin has had to increase VAT and taxes for small businesses.

Due to sanctions, Russia’s weekly revenues from oil exports fell by $500 million. Compared with October 2025, Russia’s oil revenues declined by 35%.