Russian oil companies face bankruptcies as sanctions slash prices
Russia’s oil sector is entering its deepest crisis in decades as Western sanctions drive export prices sharply lower and push smaller producers toward insolvency, threatening a central pillar of the Kremlin’s wartime economy.
State lender VTB is preparing to file for bankruptcy against First Oil, a company owned by former Sibur shareholder Yakov Goldovsky, after it accumulated roughly 6 billion rubles in debt that it can no longer service, according to The Moscow Times. Based in Khanty Mansiysk, Russia’s main oil producing region, First Oil operates several small fields with combined reserves of about 14 million tons and annual output of around 500,000 tons.
Its collapse follows a string of similar failures. At the end of 2025, Yangpur Oil, which represents Belarusneft in Russia and operates fields in the Yamalo Nenets autonomous district, entered bankruptcy proceedings. Earlier, Astrakhan Oil Company and NK Gorny, which held three licenses in the Nenets autonomous district, were declared bankrupt after legal action by tax authorities.
The downturn accelerated after sanctions imposed in November by the Trump administration targeted Russia’s two largest oil companies, Rosneft and Lukoil. The measures expose buyers and shippers of their crude to potential exclusion from the US banking system. As a result, purchasers are demanding discounts of $25 to $30 per barrel to offset sanctions risk, pushing Russia’s benchmark Urals crude below $40 a barrel, levels last seen during the pandemic era.
Around half of Russia’s oil and gas producers are now operating at a loss, with cumulative losses reaching 575 billion rubles between January and November, according to Rosstat data cited by analysts. Even companies that remain profitable have seen earnings fall by more than half to roughly 3 trillion rubles over the same period.
Craig Kennedy, a former Bank of America vice president now affiliated with Harvard’s Davis Center for Russian and Eurasian Studies, told The Washington Post that the sector is sliding into crisis and that the latest sanctions are likely to accelerate the trend. He said the pool of buyers willing to purchase sanctioned oil is limited.
High domestic interest rates have compounded the strain. Russia’s central bank raised its benchmark rate to 21 percent before cutting it to 16 percent, increasing borrowing costs across the economy. The central bank said lenders have had to restructure about 2.7 trillion rubles in loans to the oil and gas sector, making it the largest contributor to credit restructurings nationwide.
The revenue decline has been stark. In January 2026, Russia’s oil and gas revenues fell to 393 billion rubles, down 50 percent from January 2025 and the lowest level since June 2020, according to Finance Ministry data. For full year 2025, oil and gas revenues dropped 24 percent to 8.5 trillion rubles, Reuters and Anadolu Agency reported.
The Kremlin had based its 2026 budget on an Urals price of $56 per barrel, but current prices are roughly one third lower. European Commission President Ursula von der Leyen has proposed a complete ban on EU maritime services for Russian oil, arguing that sanctions remain a tool to pressure Moscow into negotiations. She said Russia would only engage seriously if compelled by sustained pressure.
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