Russia's Oil & Gas Revenue Sinks to a 5-Year Low
Dark CurrentRussia's critical oil and gas revenues plunged to a five-year low in 2025, hampered by weak crude prices and lost European gas markets, profoundly impacting war funding.
Russia's oil and gas revenues, the financial engine of its war in Ukraine, fell to a five-year low in 2025 as a result of slumping crude prices and a steep decline in natural gas exports.
According to data released by the Finance Ministry on Thursday, the nation's budget collected a total of 8.48 trillion rubles ($108 billion) in oil and gas taxes last year. This figure represents a 24% decrease from 2024 and marks the lowest intake since the beginning of the decade.
As a top-three global oil producer with the world's largest gas reserves, Russia depends heavily on energy taxes to fund state operations. The revenue decline—driven by lower global oil prices, a stronger ruble, and energy sanctions—coincides with a period of significantly increased military spending by the Kremlin to support the war, now approaching its fifth year.
To cover the growing shortfall between income and expenditure, the Russian government has utilized over half of its National Wellbeing Fund, a reserve intended to cushion the economy from shocks. It has also resorted to expensive borrowing that will require years to repay.
Why Oil Revenues Tumbled
Oil revenues alone dropped by more than 22% year-on-year to 7.13 trillion rubles, the lowest level recorded since 2023. This downturn was fueled by concerns about a global crude oversupply and specific discounts applied to Russian oil due to Western sanctions, which together constricted the flow of money into state coffers.
Price Pressures and Sanctions
Official data shows the average price of Urals, Russia's primary export blend, was calculated at $57.65 per barrel for tax purposes in 2025, a 15% drop from the previous year.
The financial pressure intensified starting in November, when the U.S. sanctioned major producers Rosneft PJSC and Lukoil PJSC. Following this, the discount on Urals crude compared to the Brent benchmark widened to approximately $27 per barrel at the point of export, as buyers required greater financial incentives to continue their purchases.
The Stronger Ruble's Impact
A stronger domestic currency also contributed to the decline in revenues. In 2025, the ruble traded at an average of 85.67 per dollar, which was 6.4% stronger than in 2024. The combination of weaker Urals prices and a stronger ruble meant that the Russian budget received fewer rubles for each barrel of oil produced and sold on the international market.
The Collapse of Gas Exports to Europe
Russia's tax income from the natural gas industry experienced an even sharper decline, falling over 30% to 1.35 trillion rubles. Historical data indicates this is the lowest level since the pandemic year of 2020.
Once the single largest supplier of natural gas to Europe, Russia has progressively lost nearly its entire client base in the region since the start of the war in Ukraine.
The situation worsened from January 2025, when the gas transit deal through Ukraine expired, cutting off a key export route and leaving state-owned Gazprom PJSC with fewer westward pipelines. While Russia has been increasing its natural gas exports to China, these deliveries are not sufficient to fully compensate for the loss of the vast European market.
