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Russia’s oil and gas revenues fell 24% in 2025 to their lowest level since 2020. Sanctions, a strong ruble, and falling global prices came together to squeeze the Kremlin’s primary source of war funding.

The revenue collapse pushed Russia’s budget deficit to 5.65 trillion rubles ($72 billion)—the highest since 2009—even as military spending consumed a record 13.5 trillion rubles ($145 billion), former Ukrainian Infrastructure Minister Volodymyr Omelyan noted on 1 February, citing data from Russia’s Finance Ministry and economic analysts.

The Kremlin built its 2025 budget assuming Urals crude would average $69.70 per barrel. Reality delivered $56—and December saw prices crash to $34.52, half the budgeted level. Chart: Russian Finance Ministry, Reuters / Euromaidan Press

Revenue missed the target by 25%

Russia’s Finance Ministry reported oil and gas revenues of just 8.48 trillion rubles ($108 billion) for 2025, down from 11.13 trillion rubles in 2024. The Kremlin had originally budgeted for 10.94 trillion rubles.

February Urals cargoes are now trading at discounts of $10 per barrel to Brent.

The 2025 budget assumed Urals crude would sell at $69.70 per barrel. By mid-December, the price at Russia’s Black Sea port of Novorossiysk had fallen to $34.52—roughly half the budgeted price. Some shipments to China sold below $30, the lowest since the pandemic. Prices have since recovered somewhat, with Urals trading around $54-65 in late January—still below the $59 assumed in Russia’s 2026 budget.

Global markets offer no relief.

February Urals cargoes are now trading at discounts of $10 per barrel to Brent for delivery to Indian ports—close to the widest discount since 2022—as intensified sanctions pressure forces Russian exporters to cut prices, Reuters reported on 26 January.

Global markets offer no relief. Oil prices fell more than 4% on Monday after US President Donald Trump signaled de-escalation with Iran, with Brent dropping to $66 per barrel, CNBC reported. Capital Economics warned that “geopolitical risks mask a fundamentally bearish oil market” and forecast continued downward pressure on Brent by the end of 2026.

Russia’s January 2026 oil revenues are projected to sink 46% compared to January 2025, according to Reuters calculations.

Russia’s budget deficit hit 5.65 trillion rubles in 2025—the largest since at least 1996 and nearly double the original target. The brief surplus of 2021 now looks like an anomaly as war spending and collapsing revenues push Moscow deeper into the red. Chart: Russian Finance Ministry, Trading Economics / Euromaidan Press

Reserves draining fast

Russia’s National Wealth Fund—the emergency reserve meant to cushion shocks—held $52.2 billion in liquid assets as of 1 January 2026, down from $113 billion before the war. That’s a 2.5-fold decline.

Gazprombank analysts warn the fund could be exhausted within a year if current trends persist. The average Urals price stood at $39 in December 2025 and slipped further to $36-38 by late January—well below the $59 cutoff price that triggers reserve spending.

Dependence on China deepens

Moscow has tried to compensate for energy losses through import substitution, but the results have been dismal. Russia remains critically dependent on foreign technology for war production, Omelyan noted.

Four-fifths of the critical electronics used in Russian drones now come from China.

In practice, Russia has swapped Western dependence for Chinese dependence. Four-fifths of the critical electronics used in Russian drones now come from China, Ukrainian intelligence confirmed as of early 2025. China has supplied at least $4.9 billion worth of microelectronics to Russia since the invasion—components that power precision-guided weapons and fighter jets, The Telegraph reported last week.

“Without access to the Chinese economy, Chinese market, and China as a pass-through for a lot of these goods and technology, Russia would have very much struggled to sustain this war,” Carnegie Endowment fellow Michael Kofman told The Telegraph.

Russia’s oil and gas revenues fell to 8.48 trillion rubles in 2025—25% below the Kremlin’s budget target and the lowest since 2020. Chart: Russian Finance Ministry / Euromaidan Press

What this does—and doesn’t—change

Russia is not on the verge of collapse. As long as the Kremlin can feed and equip its army, pay soldiers’ families, and keep Moscow and St. Petersburg’s middle classes reasonably comfortable, the system will grind on. Putin has shown a willingness to raise taxes, issue debt, and drain reserves to maintain the war.

“We will compensate using the National Wealth Fund.”

But the room to maneuver is shrinking. The VAT has been raised to 22% to compensate for falling energy revenues. Deputy Finance Minister Vladimir Kolychev admitted in January that further shortfalls are possible. “That’s not something we control,” he said. “We will compensate using the National Wealth Fund.”

The Kremlin isn’t running out of money tomorrow. But it’s spending faster than it’s earning, borrowing to cover the gap, and watching its cushion disappear—while the war shows no sign of ending.

Read also

• Ukraine set to outgrow Russia in 2026 as oil revenues slide (INFOGRAPHIC)

• Moscow’s boom, the provinces’ bust: Russia’s war economy turns predatory (MAP)

• Russia imports more food, fewer machines as sanctions tighten (INFOGRAPHIC)

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