The U.S. Named A Factor That Will Hit The Kremlin's Finances Powerfully
- 17.01.2026, 11:28
Russia's reserves are depleted.
Russia's reserves for nearly four years of full-scale war against Ukraine have been virtually depleted. At the same time, Russia's oil and gas revenues have fallen to a five-year low in 2025, bringing in a quarter less money than a year earlier.
That's why increased sanctions against Russia and continued low crude oil prices could be the factor that really affects the Kremlin's ability to continue the war. This is according to analysts at the US-based Institute for the Study of War (ISW).
Russian reserves are depleting
Analysts predict: falling Russian oil and gas revenues and the continued depletion of Russian liquid reserves will likely make it more difficult for the Kremlin to continue funding the protracted war in Ukraine.
According to Bloomberg, Russia's oil and gas revenues in 2025 have fallen to a five-year low amid a decline in gas exports due to Western sanctions and falling crude oil prices.
The Russian Finance Ministry said on January 15 that Russia's federal budget received 8.48 trillion rubles (about $108 billion) in oil and gas revenues in 2025. And this is 24% less than in 2024.
Bloomberg added that Russia's federal budget received fewer rubles for each barrel produced and sold in 2025 because of the strengthening ruble. The strengthened ruble has increased Russia's purchasing power in the global market, making parallel imports cheaper amid Western sanctions, but has had a negative impact on Russia's export revenues.
Russian oil and gas revenues accounted for about 30% of Russia's total federal revenues in 2024, but they fell 22% year-on-year in 2025. And the further decline in Russia's revenues from the sale of oil and gas resources has to be recognized even by Russia's top officials. In particular, back in September, Russian Finance Minister Anton Siluanov said that Moscow expects this drop to reach about 30% in 2026.
And at the same time, for almost four years of war, the Russian Federation has practically depleted its liquid reserves. Bloomberg estimates that as of 2025, Russia has spent more than half of its sovereign sovereign wealth fund on bridging the ever-widening gap between revenues and expenditures. In the end, the aggressor state had to resort to expensive borrowing that will take years to pay back.
The ISW analysts reminded that the sovereign wealth fund is a state investment fund from which Russia borrows money to avoid debt. However, Moscow has been steadily depleting the fund's liquid reserve to finance the war against Ukraine. For example, in late November of last year, reports surfaced of the sale of Russian gold reserves.
"Putin has grossly and mismanaged Russia's economy, which is suffering due to high spending on the Russian army and Russian defense industrial base, significant labor shortages, and a shrinking Russian sovereign wealth fund. ISW continues to assess that increased Western sanctions against Russia - combined with continued Western military support for Ukraine - are likely to further impact the Russian economy and Russia's ability to finance a protracted war," ISW concluded.