Russia's oil and gas revenues collapse dramatically - what now?

Russia's oil and gas revenues collapse dramatically - what now?

Russia's economy is under massive pressure as revenue from the sale of oil and gas has plummeted. The Western sanctions are having a noticeable effect, while the new federal government in Germany under Friedrich Merz is trying to persuade the USA to impose additional sanctions. Reported similarly fr.de about the falling revenues, which are putting a significant strain on Russian budget planning.

In the first quarter of 2025, the profits of Russian gas and oil companies reached about 790 billion rubles (about 10 billion US dollars), a drastic decline compared to the previous year, when they were 1.4 trillion rubles (about 18 billion US dollars). Particularly alarming is the decline in revenue from oil sales, which fell by around 35 percent from May 2024 to May 2025. The price of a barrel of the Russian Ural variety fell over the same period from $66 at the beginning of the year to just $52 at the end of May 2025.

Budget situation and exports

Oil and gas are Russia's most important exports and contribute significantly to government revenue. In 2023, the main sources of revenue predominated: crude oil ($122 billion), refined petroleum ($52.1 billion), natural gas ($39 billion), coal briquettes ($27.2 billion) and gold ($13.6 billion). Russia is reported to have invested in a shadow fleet to evade sanctions and continue exporting oil, although deployment of that fleet has declined in recent months.

Fossil fuel export revenue fell by six percent between March and April 2025, despite increased export volumes. This contradicts the Russian government's plans, which originally expected oil prices to be around $70 per barrel. Due to current market developments, the budget for 2025 has already had to be adjusted because more than $15 billion is missing.

International reactions and future developments

The International Energy Agency (IEA) also warns of a slowdown in global oil demand. In the context of the targeted sanctions, calls for tougher action against Russia are emerging in the West. Six EU countries are calling for the G7's $60 price cap on Russian oil to be tightened to reduce Russia's revenues used to finance the war against Ukraine.

The G7 countries have set maximum prices for Russian crude oil and refined products when transported by sea. EU countries emphasize the importance of measures targeting oil export revenues to reduce Russia's main source of income. Interestingly reported n-tv.de that Russia was able to increase revenue from oil and gas sales by more than 26 percent to 11.13 trillion rubles (107 billion euros) in 2024, after revenue fell by 24 percent in 2023 due to lower oil prices and falling gas exports.

Overall, the situation for the Russian economy remains tense because, despite temporary increases in revenue, there are structural problems and externalized pressures that threaten the stability of the financial situation.