Energy Front

The surge in oil prices resulting from the conflict in the Middle East has provided a significant financial boost to the Kremlin. According to Financial Times calculations, the Russian budget is currently receiving between 110 and 160 million dollars in additional daily revenue. In the first 12 days of the war alone, Moscow’s nominal earnings reached up to 1.9 billion dollars. If average prices remain in the 70–80 dollar per barrel range, additional March revenues could approach 5 billion dollars. India and China Compete for Russian Barrels India has taken advantage of temporary US waivers, sharply increasing its purchases: in just five days, contracts for 30 million barrels were signed—an amount equal to the entire import volume for February. Analysts at Kpler note that amid the shortage, Indian companies have shifted from demanding discounts to paying premiums, offering 5 dollars over the Brent price. With Middle Eastern routes paralyzed, India and China are effectively competing for Russian crude, pushing shipment volumes to Indian ports toward 2 million barrels per day. Collapse of Sanctions on Maritime Services The price of Urals crude has reached 85 dollars per barrel, a peak not seen since 2022. Robin Brooks of the Brookings Institution observes that at these price levels, the EU ban on providing maritime services in European ports—a key part of the 20th sanctions package—is effectively “dead.” Russia has temporarily emerged as the primary beneficiary of the conflict, using high prices not only to fill its coffers but also to increase pressure on Washington to further ease the sanctions regime.

Plans discussed by the US for potential easing of sanctions against Russia to mitigate the energy crisis caused by the war in Iran have been scrapped. US Energy Secretary Chris Wright confirmed in a CNN interview that Washington does not plan to lift restrictive measures on Russian oil. Furthermore, the US plans to implement uranium sanctions in the future, phasing out Russian fuel for nuclear power plants. Failure of the Kremlin’s Key Negotiator Wright’s statements came just a day after Kirill Dmitriev, head of the Russian Direct Investment Fund and a key negotiator for the Kremlin, visited Florida. Dmitriev held talks with officials at Mar-a-Lago regarding “interaction in energy markets.” While Dmitriev claimed the US is beginning to understand Russia’s “systemic role,” Dmitry Peskov admitted it is too early to speak of any effective cooperation. Isolation Instead of an Energy Reprieve For Europe, this is a clear signal: the Trump administration is not prepared to sacrifice strategic pressure on the aggressor for short-term market stability. The Kremlin’s attempt to use the Iranian war as leverage for blackmail has failed. Instead of the expected lifting of restrictions, Moscow faces the prospect of sanctions expanding into the nuclear sector, permanently stripping Russia of its “energy superpower” status in Western markets.

The Russian financial market is facing a record-breaking deficit of foreign currency from its largest players. According to the Central Bank, in February, the 29 largest exporters cut their net sales of foreign currency by 31%, down to $3.5 billion. This is the lowest figure since the data was first published in November 2022. Compared to February 2025, the volume of currency entering the exchange has plummeted nearly threefold. The “Cheap Oil” Effect The primary reason for this collapse is a time lag: in February, the economy processed payments for December and January, when the price of Russian Urals crude fluctuated between $39–41 per barrel. Economist Egor Susin notes that low export earnings from previous months are now draining the domestic currency market. According to IEA estimates, Russia’s total oil export revenues in February amounted to $9.5 billion, which is $4 billion less than a year ago. Drop in Physical Volumes In addition to pricing, the decline in export volumes has taken a toll. In February, Russia exported an average of 6.6 million barrels per day—the lowest level since early 2022. Oil and petroleum product exports dropped by 850,000 barrels per day compared to January, confirming earlier reports of technological and logistical bottlenecks in the industry. Rublization and Debt Repayment The Central Bank also highlighted other factors for the decrease in sales: For Europe, this is a sign of the increasing fragility of the Russian ruble. When major exporters stop providing a steady flow of hard currency, exchange rate stability relies entirely on administrative interventions.

The Russian coal industry is facing a profound financial collapse. According to Rosstat, the sector recorded a total loss of 408 billion rubles for the past year. With a total output of 429 million tons, every single ton of coal produced resulted in an average net loss of 951 rubles. This makes coal the fastest-degrading sector in the entire Russian economy. Profitability Crash and Rising Debt The financial health of coal companies has become critical. Only one in three enterprises (33.9%) managed to remain profitable, compared to nearly half just a year ago. Profits for successful players were halved, while the losses of failing companies nearly tripled, reaching 484,9 billion rubles. The share of loss-making companies in the sector hit a record 66.1%. The Exchange Rate and the Sanctions Trap The primary drivers of the crisis are Western sanctions, low global coal prices, and a more than 20% strengthening of the ruble. Since nearly half of all coal produced is exported, the “strong” ruble stripped companies of the revenue needed to cover operating costs. Vladimir Korotin, CEO of “Russkiy Ugol,” described the current situation as the “sharpest crisis since the 1990s.” Banking Sector at Risk The industry’s woes are beginning to destabilize the banking system. According to the Central Bank of Russia, the share of bad and non-performing loans in the “metals and coal” category jumped from 2.8% to 7.6%. In an attempt to save the sector, the government has resorted to emergency measures, including tax deferrals and rail subsidies. However, for Europe, this collapse is a prime example of how sanctions and isolation are dismantling entire industrial clusters, turning a once-profitable export resource into a burden on the state budget.

The Russian oil industry is losing momentum. In February, average daily production was 390,000 barrels below the OPEC+ quota. According to the cartel’s monthly report, output has declined for the third month in a row amid tightening sanctions and waning demand from key buyers. Production Lows Last month, Russian companies produced an average of 9.184 million barrels per day. This is 56,000 barrels less than in January and marks the lowest level since last August. The last production peak was recorded in November (9.38 million barrels), followed by a steady decline. The Sanctions Noose and the Indian Factor Experts attribute the downturn to increased Western pressure and reduced purchases by India, which continues to demand record discounts. Even temporary waivers from the Trump administration have failed to reverse the production slump. For Europe, this confirms that the Russian “oil machine” is wearing down: the lack of access to Western well-service technologies and freight complications make maintaining previous production levels impossible.

Indian companies have staged an unprecedented raid on the spot market. In less than a week, they bought up all available volumes of Russian oil sitting on tankers awaiting buyers. According to Bloomberg, total purchases reached approximately 30 million barrels. This is equivalent to an entire month’s worth of imports from the Russian Federation based on February averages (1.1 million barrels per day). Floating Storage Finally Heads to Port The rapid buy-up was made possible because dozens of vessels carrying Russian crude had been drifting in the Asian region for months, serving as floating storage due to sanctions pressure. As soon as the Donald Trump administration issued a temporary waiver for purchases, Indian refineries immediately contracted these volumes. This allowed Moscow to swiftly offload overstocked tankers that had previously struggled to find ports of entry. Temporary Success Amid Strategic Deadlock For European analysts, this spike in activity is a classic illustration of market opportunism. India is cynically using the “Trump Window” to replenish reserves with discounted crude while sanctions are briefly paused. However, this success for the Russian Federation remains localized: once the 30-day waiver expires and the Indian banking sector (including the giant SBI) continues to block transactions, exports risk reverting to unpaid “floating warehouses” once again.

The domestic political standoff in the USA is intensifying over the issue of the Kremlin’s energy isolation. Congressional Democrats have urged the Donald Trump administration to immediately revoke the decision allowing temporary sales of Russian oil to India. A letter addressed to Treasury Secretary Scott Bessent was sent by Representative Sam Liccardo and Senator Ruben Gallego. A Temporary Loophole for Indian Refineries The trigger for this sharp criticism was a 30-day waiver from the sanctions regime issued by the US Treasury. This license permits Indian refineries to purchase Russian crude without risking secondary sanctions. Lawmakers labeled the move “dangerous and unjustifiable,” emphasizing that temporary relief provides direct financial benefits to an adversary nation at a critical juncture. Defending Sanction Pressure as a Western Priority For European allies and hardliners in Washington, any attempt by Trump to “flood the market with cheap oil” using Russian resources is seen as an erosion of global security. Democrats insist that the economic benefit of lower prices cannot justify dismantling the sanctions front. While Moscow pins its hopes on a long-term easing of the regime, pressure from Congress may force the White House back to a policy of maximum isolation for the Russian energy sector.

Energy blackmail is losing its grip. After surging to nearly $120 per barrel on Monday morning, the price of Brent crude began a sharp decline. The sell-off accelerated after Donald Trump promised to end the war in Iran “very soon” and temporarily lift oil sanctions to cool the market. During overnight electronic trading, prices plunged below the $90 threshold. Gas Market Crash and Failed OPEC+ Pressure Efforts by Middle Eastern nations to boost prices by cutting production failed to impress traders. By 12:00 Moscow time, oil was trading at $91.7, a 7.3% drop from Monday’s close. Natural gas in Europe saw an even more dramatic reversal: from a peak of €68.8/MWh (nearly $835 per 1,000 cubic meters), the Dutch TTF futures plummeted by 32.7%, reaching €47.9 by Tuesday afternoon. Closing the Kremlin’s “Window of Profit” For Europe, this collapse in prices is a vital sigh of relief that undermines Russia’s strategy of profiting from global instability. While Washington steps in as a stabilizer, the aggressor’s resource-dependent economy is facing a new reality where oil revenues may shrink much faster than planned. The geopolitical gamble on high energy prices has failed; European resilience combined with US pragmatism is delivering a calculated blow to Moscow’s fiscal ambitions.