The Numbers Moscow Didn't Want You to See

Russia's Finance Ministry released its 2025 federal budget execution report — and it's brutal.

Oil and gas revenues totaled 8.48 trillion rubles last year. That sounds big until you compare it to 11.13 trillion rubles in 2024, according to Meduza, the independent Russian news outlet. That's a 23.8% drop in one year. In dollar terms: $111.2 billion versus $146 billion.

Russia lost roughly $35 billion in energy revenue in a single year while simultaneously fighting a land war in Europe.

Record Low — And Falling Further

By year's end, oil and gas made up less than 23% of Russia's federal budget. According to Meduza, that's the lowest share in at least two decades. The last time commodity revenues fell below 30% was 2020 — when COVID lockdowns crushed global demand. This time there's no pandemic to blame.

Russian Finance Minister Anton Siluanov has already admitted publicly that the oil and gas share will fall even further through 2026. His deputy, Vladimir Kolychev, warned that spending front-loaded at the start of the year combined with shrinking revenues will produce a significant budget deficit.

These are Russian officials making these statements.

Why Oil Revenue Is Collapsing

Three factors are hammering Russia's energy income simultaneously.

First, prices. Russia's Urals crude benchmark dropped below $40 a barrel in December 2025, according to Meduza. That's a floor that makes many Russian export contracts barely profitable.

Second, the ruble is relatively strong — which sounds good but actually means energy export earnings convert to fewer rubles, squeezing the domestic budget numbers.

Third, the global oil market is flooded. The U.S. Energy Information Administration has reported that rising global production and swelling inventories have outweighed any disruption-driven price bumps. OPEC and the U.S. are effectively out-producing Russia's leverage, according to economist Igor Lipsits, writing in the Moscow Times.

The LNG Pivot Is a Money Pit

When Europe cut off Russian energy, Moscow's answer was: pivot to Asia. Sell to China and India instead.

The problem? According to Reuters, that shift has doubled Russia's LNG shipping costs. Moving liquefied natural gas to Asian buyers requires longer routes, more specialized tankers, and infrastructure Europe's proximity never demanded. The revenue is lower. The costs are higher. The margin is getting squeezed from both ends.

Europe, meanwhile, rewired its gas infrastructure and started buying LNG from the U.S. and Qatar. As Lipsits put it — Europe didn't freeze, didn't collapse, and didn't come crawling back. The leverage Russia thought it had turned out to be leverage Europe used to finally kick its own addiction to Russian energy.

How the Kremlin Is Plugging the Hole

With commodity revenues shrinking, Moscow is doing what governments do when they're out of good options: taxing people harder.

According to Meduza, Russia has raised its value-added tax to 22% to generate additional revenue. Higher taxes on households and businesses are being used to compensate for what oil and gas no longer provide. The additional VAT revenue won't even begin flowing in until the second half of the year.

Russian citizens are being squeezed to fund a war their government shows no sign of ending.

Western and Russian Media Coverage

Most Western outlets — CNN included — focus heavily on battlefield hardware stories: WWII-era tanks being deployed, equipment losses, frontline shifts. That's real and relevant, but it's the surface layer.

The deeper story is the economic attrition. Russia is burning through its war chest faster than it can replenish it, and the financial architecture supporting the war is visibly cracking. That story gets far less airtime than drone strikes or territorial maps.

Left-leaning outlets tend to frame Russia's economic pain as a Western sanctions success story — partially true, but incomplete. Sanctions alone didn't do this. A global oil glut, OPEC's production decisions, and the U.S. energy boom all contributed. Multiple forces converged.

Right-leaning outlets, when they cover this at all, sometimes overstate the imminence of Russian collapse — a prediction that's been wrong repeatedly since 2022. Russia is hurting. Russia has not collapsed. Both things are true.

The Economic Foundations of the War

Lipsits argues that Russia entered year five of the war "significantly weakened" — burdened by sanctions, war spending, declining production, and military-industrial bottlenecks. That assessment squares with the Finance Ministry's own data.

Economic pain, however, has not translated into political pressure for peace. The Kremlin is showing zero sign of negotiating seriously. Putin is taxing Russian citizens harder, accepting lower energy revenues, and continuing to fight.

At some point the math catches up with the mission. The question is when — and how much the war costs everyone else in the meantime.

Regular Americans and Europeans are still feeling energy price volatility tied to this conflict. Every month Russia keeps the war going is another month of global market distortion. The Kremlin's economic problems are real. They're just not real enough yet to stop the killing.