According to the International Energy Agency, Russia’s oil revenues have fallen to their lowest levels since the war began. A global supply surplus keeps crude prices depressed despite ongoing geopolitical tensions.

This price squeeze hits Moscow as military spending peaks. Russia allocated a record 13.5 trillion rubles ($145 billion) to defense in its 2025 budget plans—a 25% increase representing 6.3% of GDP—while oil revenues dropped 37% year-on-year to 680 billion rubles in July alone.

Ukrainian strikes have disabled 17% of Russian refining capacity in recent months, while Rosneft reported a 68% profit collapse with free cash flow plunging 75%.

The IEA reported global oil production reached a record 106.9 million barrels per day in August, with non-OPEC+ producers including the United States, Brazil, Canada, and Guyana pumping at near all-time highs while China continues stockpiling crude oil, absorbing excess supply that might otherwise support prices.

Ukraine’s systematic infrastructure campaign

Ukrainian drone campaigns have systematically targeted Russian energy infrastructure across multiple regions.

The attacks have hit facilities from the Syzran refinery in Samara Oblast—struck four times in 2025—to port terminals in Ust-Luga that handle petroleum exports. Ukrainian intelligence estimated inflicting over $658 million in damages to Russian energy infrastructure in the first six months of operations through April—and the toll has likely grown significantly since then.

Sanctions maintain export pressure

Western sanctions continue to constrain Russian oil trade, with recent measures targeting 183 vessels in Moscow’s “shadow fleet.” Meanwhile, the ruble’s strength has reduced oil companies’ local currency earnings from exports.

According to previous Euromaidan Press reporting, companies now receive 4,711 rubles per barrel compared to 6,127 rubles in 2024.

Long-term depletion concerns

The long-term outlook appears equally challenging. Ukrainian intelligence reports that 96% of Russia’s oil exploration licenses have been allocated, meaning nearly all available oil field areas have been assigned to companies for extraction rights.

According to Ukrainian intelligence analysis, investor interest in Russian energy projects has collapsed. In 2024, hydrocarbon extraction rights auctions generated only $50 million, half of which came from less strategically important placer gold mining.

Global implications

The IEA forecasts global oil stocks will rise by an “untenable” 2.5 million barrels per day in the second half of 2025, suggesting continued pressure on prices and Russian revenues.

For Ukraine, each percentage point drop in Russian oil income translates to reduced resources available for military operations, while the systematic degradation of refining capacity limits Moscow’s ability to supply its own forces.

Military conflicts typically drive energy prices higher, providing aggressor states with windfall revenues to fund extended campaigns.