Russia’s Oil Revenue Slump Pushes Tax Hikes and Domestic Borrowing

SEATTLE (Oil Monster): Russia is increasingly relying on higher taxes and domestic borrowing to plug widening budget gaps as oil revenues fall sharply and economic growth slows, underscoring mounting pressure on the Kremlin’s war-time finances.

Oil and gas exports have long underpinned Russia’s fiscal stability during its war against Ukraine, but revenues have now dropped to levels not seen since the COVID-19 pandemic.

The decline follows fresh punitive measures from the United States and the European Union, added tariff pressure from U.S. President Donald Trump on India, and a tougher crackdown on sanctions-evading tankers transporting Russian crude. As a result, Moscow has been forced to raise taxes and tap Russian banks to stabilize public finances in the near term.

In January, state revenues from oil and gas taxes fell to 393 billion rubles (€4.27 billion), down from 587 billion rubles in December and 1.12 trillion rubles a year earlier, according to Janis Kluge of the German Institute for International and Security Affairs. Buyers are demanding steeper discounts to offset sanctions risks, pushing the Urals crude discount to around $25 per barrel in December.

Meanwhile, economic growth has stalled as war-related stimulus fades and labor shortages persist. GDP rose just 0.1% in the third quarter, with 2026 growth forecasts cut to 0.6%–0.9%, sharply below the 4% expansion seen in 2023 and 2024.

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