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The key pillar of Russia’s war chest is cracking. The timing couldn’t be worse
In July, Russian President Vladimir Putin’s administration collected 787.3 billion rubles, or $9.8 billion, from oil and gas revenue — 27% lower than a year ago, according to the country’s finance ministry on Tuesday.
The decline in energy tax revenue further strains Russia’s budget, which posted a deficit of 3.7 trillion rubles, or 1.7% of GDP, in the first half of the year. Oil and gas remain vital to Russia’s economy and to funding its war, now in its fourth year.
That funding is now under threat on multiple fronts.
Last month, the European Union unveiled its 18th sanctions package against Russia. It replaced the fixed $60-per-barrel cap on Russian oil with a more flexible mechanism that limits prices to 15% below global market averages, effectively slashing Moscow’s revenue on each exported barrel.
But the pressure isn’t just coming from Europe.
Recently, Trump has sharpened his rhetoric — and trade threats — against countries buying Russian oil, singling out India, a top buyer of the fuel.
Last week, Trump announced a 25% tariff on Indian goods and a “penalty” for its purchases of Russian oil.
Recently, Trump has sharpened his rhetoric — and trade threats — against countries buying Russian oil, singling out India, a top buyer of the fuel.
Last week, Trump announced a 25% tariff on Indian goods and a “penalty” for its purchases of Russian oil.
“Putin will stop killing people if you get energy down another $10 a barrel. He’s going to have no choice because his economy stinks,” Trump told CNBC on Tuesday.
Even with Trump’s ultimatum, Russia is likely to dig in its heels, according to Tatiana Orlova, a lead emerging markets economist at Oxford Economics.
“The Russian leadership seems to view the economy’s resilience during the first three and a half years of war as proof that it is immune to further sanctions,” Orlova wrote in a Wednesday note.
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