Information on the current losses of the Russian Federation due to sanctions, as of 01.02.2026.
1. Russia’s oil revenues are sharply falling.
– The key source of military spending is rapidly weakening: according to official data, in 2025, oil and gas revenues fell by almost 25%. Military expenses are estimated at about $170 billion per year and already consume about 30% of the federal budget, which amounts to around $580 billion.
– Under such conditions, the Kremlin is forced to cover the gap by raising taxes and increasing public debt. The budget deficit at the end of 2025 reached $72 billion — the highest level since 2009, and the risks of further growth remain.
– Price trends are working against Moscow. The average price of Russian oil in December fell to $39 per barrel compared to over $57 in August, while buyers are increasingly demanding additional discounts due to sanctions risks.
– A strong ruble also reduces budget revenues: in 2025, it strengthened by about 45% against the dollar, reducing ruble earnings per sold barrel.
– Additional pressure is created by the fight against the “shadow fleet” and strikes on Russia-related oil infrastructure, complicating exports and already leading to local fuel crises and temporary restrictions on the export of oil products. As a result, the war increasingly shifts the financial burden onto businesses and the population, depriving the regime of the resilience reserve previously provided by high oil earnings.
2. Russia’s military budget enters a zone of increased risk amid a prolonged war and the Kremlin’s failed economic calculations.
– Funding military actions is becoming increasingly difficult due to the decline in energy revenues, the strengthening of the ruble, and the growing budget deficit.
– The Russian authorities recognize the risk of exceeding planned expenditures this year and are urgently trying to find up to 1.2 trillion rubles of additional income to cover the “gap” in finances. This is equivalent to about 0.5% of GDP over the already revised deficit.
– Initial budget plans turned out to be unrealistic: instead of a 0.5% deficit, the government was forced to raise the target to 2.6% of GDP and sharply cut spending at the end of the year. The situation is aggravated by sanctions and price pressure on Russian oil.
– The budget was calculated with Urals oil priced at $59 per barrel and an exchange rate of over 92 rubles per dollar, but in fact, oil is trading around $55, and the ruble is significantly stronger. Under such conditions, oil and gas revenues could fall from an expected 8.9 trillion to about 6.75 trillion rubles, forming an additional deficit of nearly 2.2 trillion rubles.
– To patch the budget, the state is increasingly accumulating debt by placing record volumes of expensive OFZs. This underscores the vulnerability of the financial model of war: even with a formally “moderate” deficit, Russia is forced to live on debt and deplete reserves. The Kremlin does not anticipate a real breakthrough in negotiations and continues to insist on territorial demands that have no chance of international recognition.
– Prolonging the war means further depletion of the budget, while the economic resource for financing it is rapidly shrinking.
3. Russia cannot escape technological dependency on imports.
– The Russian government acknowledges that sanctions have severed ties with global supply chains, and attempts to replace Western technologies with domestic production are effectively stalling.
– According to the Ministry of Economic Development of Russia as of February 2025, the country is critically dependent on imports in sectors directly relevant to the war: machinery, drone production, energy. Even plans to increase non-energy exports and create alternative infrastructure remain unfulfilled.
– Meanwhile, the government has declared a six-year import substitution plan with a target for 2030 — the end of the current presidential term. These goals are considered detached from reality. In key technologies, the level of import dependency remains extremely high.
– A telling example is the Kh-101 cruise missile, which may contain over 50 foreign components, including American electronics. The situation is no better in civil aviation: airlines are forced to use smuggling channels to obtain spare parts, and the program to create a “fully Russian” MS-21 aircraft required redesign after starting tests in 2025 due to the absence of Western components.
– Under the pressure of sanctions, Moscow has effectively replaced dependence on the West with dependence on China. According to the Kyiv School of Economics, in 2023, 90% of microelectronics imported into Russia came from China. The Russian drone industry also relies almost entirely on Chinese engines, cameras, processors, batteries, and sensors.
– Often Chinese products are simply labeled as “Russian” to formally meet import substitution plans.
4. China’s CNPC intends to resume operations at the Dalian refinery to process Russian oil.
– The Chinese market is once again absorbing Russian oil, but only as a quick profit source due to deep discounts, highlighting Moscow’s increasingly weak position in the global energy market.
– State-owned CNPC is preparing to partially restart operations at the refinery in Dalian to process Russian oil again after a pause of several months.
– This involves restarting a unit with a capacity of about 200,000 barrels per day at the refinery, which was once a key consumer of the Russian ESPO brand. The facility was halted last summer amidst a strategy review but is now resuming processing of Russian crude exclusively because of its attractive price.
– In fact, Russian oil is once again finding buyers not due to demand, but because of forced price concessions. The partial resumption of the plant opens the way for the return of seaborne Russian oil shipments to China, which were halted in the fall.
– However, it remains unclear whether the crude will be transported via the Eastern Siberia-Pacific Ocean pipeline or by sea, reflecting growing uncertainty about logistics and contracts with Russian suppliers.
5. Europe is consistently solidifying its rejection of Russian gas, building a new energy model without Moscow’s involvement.
– A key element of this reorientation is Azerbaijan, which, after the 2022 energy shock, is effectively replacing Russian supplies in the southern direction and quickly integrating into the EU’s strategic diversification plans.
– Azerbaijani gas already reaches 16 countries, and this geography continues to expand thanks to the Southern Gas Corridor.
– Supplies are conducted through the SCP, TANAP, and TAP systems, which have transformed from commercial infrastructure to an energy security tool for Europe. The export volume has reached 25.2 billion cubic meters, and gas accounts for about 35% of the country’s total export revenue.
– Proven reserves are estimated at 2.6 trillion cubic meters, allowing Baku to plan stable supplies for years ahead. Against this backdrop, Russia’s positions in the European gas market appear to be definitively undermined.
– Niches that Gazprom occupied for decades are gradually being closed by alternative routes and suppliers.
– The EU is forming a new energy architecture where Azerbaijan becomes one of the main suppliers, while Russia becomes a marginalized and structurally unnecessary partner.
Photo: president.az
