Russia oil revenues hit lowest level since pandemic

Wednesday 11 February 2026 - 11:50

By: Dakir Madiha

Russia oil revenues hit lowest level since pandemic

Russia’s oil and gas tax revenues fell in January to their lowest monthly level since the COVID-19 pandemic, highlighting the mounting strain Western sanctions are placing on the Kremlin’s ability to finance its war effort.

State income from the energy sector dropped to 393 billion rubles, or about 5.1 billion dollars, in January. That marked a sharp decline from 587 billion rubles in December and a steep fall from 1.12 trillion rubles recorded in January 2025. According to Janis Kluge, an expert on the Russian economy at the German Institute for International and Security Affairs, it was the weakest monthly figure since the pandemic period.

The slump reflects a combination of punitive measures targeting Russia’s oil industry, a crucial source of state revenue. Since Nov. 21, 2025, the United States has imposed sanctions on Russia’s two largest oil companies, Rosneft and Lukoil. On Jan. 21, the European Union introduced a ban on fuels produced from Russian crude oil. Together, the restrictions have forced buyers to demand significant discounts to offset the risk of breaching U.S. sanctions.

As a result, the price gap widened significantly in December. Russia’s flagship Urals crude fell below 38 dollars per barrel, compared with roughly 62.50 dollars for Brent crude, the international benchmark. The discount reached about 25 dollars per barrel at its peak. Analysts describe the dynamic as a cascading effect, with market participants increasingly reluctant to handle oil linked to Russia.

Despite falling prices, export volumes have shown relative resilience. In the four weeks leading up to early February, Russia exported an average of 3.33 million barrels per day. That figure, however, remains below earlier peaks above 3.8 million barrels per day recorded before the latest round of sanctions.

Pressure may intensify further. European Commission President Ursula von der Leyen on Friday proposed a full ban on maritime services for Russian oil as part of a 20th sanctions package. The plan would replace the current 60 dollar price cap with an outright prohibition. Von der Leyen said stronger measures were necessary to compel Russia to engage in negotiations under sustained pressure.

In response to the revenue shortfall, the Kremlin has sought to shore up public finances through higher taxes and increased domestic borrowing. The State Duma approved a rise in value added tax from 20 percent to 22 percent and raised levies on imported cars, cigarettes and alcohol. These steps could add to inflationary pressures in an economy already strained by wartime spending and slowing growth.

Russia’s gross domestic product expanded by just 0.1 percent in the third quarter of 2025, signaling a marked deceleration. Analysts say the combination of weaker energy income and persistent military expenditures is putting additional stress on the federal budget.

Kluge said the authorities appear increasingly concerned about maintaining fiscal balance as economic momentum fades while war costs remain high.