Russia’s Oil and Gas Revenue Decline in September

Russia’s oil and gas sector, a cornerstone of its economy and a key funding source for the ongoing conflict in Ukraine, is facing a sharp downturn this month. According to estimates, revenues from these exports are projected to plummet by 23% year-on-year to approximately $7.11 billion (592 billion rubles) in September 2025. This decline, driven by falling global crude prices, a strengthening ruble, and persistent geopolitical pressures, underscores the vulnerabilities in Moscow’s energy-dependent budget as it grapples with Western sanctions and domestic disruptions.

The year-to-date figures paint an even starker picture: from January through September, oil and gas revenues are expected to total $79.6 billion, a 20.5% drop compared to the same period in 2024. While September’s haul represents a 17% increase from August—thanks to reduced government subsidies for refiners—the overall trend signals mounting challenges for Russia’s 2026 fiscal planning. With the war in Ukraine continuing to drain resources, this revenue squeeze could force tough decisions on spending priorities.

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Factors Fueling the Revenue Slump

Several interconnected factors are contributing to this revenue erosion. International crude oil prices have softened amid ample global supply and moderating demand, exacerbating the impact of deep discounts on Russian grades like Urals, which trade at a premium to Brent but still below Western benchmarks due to sanctions. The ruble’s appreciation against the dollar—bolstered by high interest rates and capital controls—further diminishes the value of export earnings when converted to rubles.

Geopolitical tensions have added fuel to the fire. Ukrainian drone strikes on Russian refineries have disrupted operations, leading to a $920 million drop in crude and fuel export revenues in August compared to July, with total August revenues at $13.51 billion. These attacks have idled key facilities, prompting Russia to ban refined petroleum product exports since February and pivot toward crude shipments. Despite some refineries resuming post-maintenance, petroleum product exports rose 8.9% month-on-month in August, primarily from Baltic, Black, and Azov Sea ports, though Arctic shipments declined.

Western sanctions, including the G7’s oil price cap, continue to shadow trade flows. U.S. pressure on major buyers like India has widened discounts on Russian crude, while shadow fleet tankers—often uninsured and flagged in non-Western countries—facilitate much of the remaining trade. In August, 53% of Russia’s seaborne oil shipments (25 million tonnes total) were carried on G7+ tankers, down from July, indicating a shift to riskier vessels.

Production Numbers Versus OPEC+ Quotas in 2025

Russia’s adherence to OPEC+ production quotas has been a mixed bag throughout 2025, with output often falling short of targets amid voluntary cuts, sanctions, and infrastructure hits. Under the latest OPEC+ agreement, Russia’s quota for September stands at 9.449 million barrels per day (bpd), up from 9.344 million bpd in August as the group begins unwinding some cuts. This gradual increase aligns with OPEC+’s plan to add about 1.3 million bpd collectively in 2025, matching non-OPEC+ growth.

However, actual production has lagged. In June 2025, Russia produced 9.022 million bpd against a quota of 9.050 million bpd—the largest gap of the year so far. Earlier months showed similar shortfalls, with May output near-compliant but still below potential. Recent drone attacks have pushed Russia “close to cutting output” below quotas, as refineries and export terminals face repeated strikes. Overall, non-OPEC+ producers like Russia are on track for 1.4 million bpd growth in 2025, but Moscow’s effective capacity is strained.

Looking ahead, Russia aims to sustain 10.8 million bpd in output, leveraging domestic demand and global recovery, but sustained compliance with OPEC+—which has raised quotas by 2.5 million bpd since April—remains uncertain amid these pressures. OPEC+ meetings, including a recent one on September 7, confirmed plans to return 1.65 million bpd in cuts starting October, but Russia’s share will depend on market dynamics.