Russia's oil revenues, which are a key source of financing for the war against Ukraine, are sharply declining. This has led to a growing budget deficit, higher taxes and an increase in the russian state debt. In addition, for the first time in several months, russia has agreed to direct peace negotiations with Ukraine.
This is what the authors of the American magazine The New York Times write about.
The article notes that two factors have hit russia's oil industry at once. First, oil prices have fallen since April after the Organization of the Petroleum Exporting Countries (OPEC) decided to gradually increase production. Second, Western sanctions have taken their toll.
As a result, according to the Ministry of Finance, last year russia's revenues from oil and gas fell by almost a quarter. In this regard, the Kremlin was even forced to raise taxes. So, the article says, the russian people will have to bear an even greater burden of the war, which costs more than USD 170 billion a year.
After US President Donald Trump imposed sanctions on russia's two largest oil companies, Rosneft and Lukoil, in October, their ability to sell crude oil has been severely affected. Russia has also faced increased enforcement of restrictions on the "shadow fleet" it uses to transport oil.
According to Sergei Vakulenko, an energy expert at the Carnegie Center, the current global oversupply means buyers now have more alternatives to russian oil. This allows them to either avoid buying altogether or demand much higher discounts to compensate for the risks of dealing with sanctioned goods.
"If it weren't for this significant drop in oil prices, all of these measures would be much less effective," he said.
As for the fall in oil prices, according to the Ministry of Economy, the average price in December was USD 39 per barrel, compared to more than USD 57 in August.
Adding to Moscow's problems is the fact that Ukraine has been using drones to strike russian-linked tankers in the Black and Mediterranean Seas. In addition, the Ukrainian military has been attacking russian oil refineries. This has caused fuel crises in several regions and forced the government to temporarily ban the export of petroleum products.
As the publication noted, this is not the first time that putin has had to deal with falling oil prices. But in the past, the russian state had more options. It could cut spending or allow the currency to weaken to fill the budget. However, war spending, which accounts for about 30% of russia's annual budget, makes it extremely difficult to cut spending.
Meanwhile, the national currency, the ruble, remains strong. Supported by import restrictions and high interest rates, it has appreciated by about 45% against the US dollar in 2025. A strong ruble means the state receives less money for every barrel of crude oil sold, the article says.
With no other options, the Kremlin has no choice but to increase the state debt and raise taxes on citizens and businesses. The russian government has also increased the tax burden on small businesses such as bakeries and shops, causing rare outrage among their owners.
Russia's budget deficit in 2025 reached USD 72 billion, its highest nominal level since 2009. Economist Vladislav Nadorshin said he expects it to increase further this year.
"The situation is getting more complicated, and it is clear that the pace of this complication is naturally worrying," he said.
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