The West cuts off funding for the war: Russia loses oil money

17 February 10:29

Despite sanctions following its full-scale invasion of Ukraine in 2022, Russia maintained stable export levels for some time by redirecting supplies to China, India, and Turkey. To circumvent the sanctions, Moscow used a so-called “shadow fleet” — old tankers without proper insurance — and sold oil at significant discounts. This was reported by "Komersant Ukrainian" with reference to Reuters.

However, the situation changed after the US tightened sanctions and imposed new trade restrictions, particularly on India, one of the largest buyers of Russian oil.

In addition, the European Union banned imports of fuel produced from Russian oil, which further reduced demand.

According to the analytical company Kpler:

in December 2025, Russian oil exports by sea amounted to 3.8 million barrels per day;
in January 2026, it fell to 3.4 million barrels;
in February, volumes fell to approximately 2.8 million barrels per day.

This is the lowest level in recent times.

India sharply reduces purchases of Russian oil

The reduction in imports from India, which previously purchased about half of all Russian maritime exports, was particularly painful for Moscow.

In 2025, India purchased approximately 1.7 million barrels of oil per day, but by January 2026, this figure had fallen to 1.1 million barrels. Imports are expected to decline even further from March onwards.

In particular, the three largest Indian oil refining companies, Indian Oil, Bharat Petroleum, and Reliance Industries, have already stopped purchasing Russian oil.

Russian oil storage facilities are filling up fast

Due to the drop in exports, Russian oil has begun to accumulate in storage facilities and tankers.

According to Kpler:

the volume of oil stored on tankers has exceeded a record 150 million barrels;
onshore tanks are approximately 51% full;
the total storage capacity is estimated at approximately 100 million barrels.

Russia produces about 9.3 million barrels of oil per day, and if exports remain limited, free storage facilities could quickly fill up.

In such a situation, companies will have only one option — to reduce production.

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Russia may reduce production as early as spring

According to estimates by Rystad Energy analysts, oil production in Russia could decline by 300,000 barrels per day as early as March to May 2026.

This will be a serious blow to the Russian economy, as oil and gas revenues account for almost a quarter of the federal budget.

According to the Russian Ministry of Finance:

oil and gas revenues in January 2026 fell by half compared to last year;
this is the lowest level since July 2020.

Sanctions hit the Kremlin’s finances

Reduced exports, falling prices, and the need to sell oil at a discount are significantly reducing Russia’s revenues.

This is putting extra financial pressure on the country’s budget, which is already under strain due to the significant costs of the war against Ukraine.

The West’s tougher sanctions policy is aimed precisely at reducing the Kremlin’s revenues from energy resources, which limits its ability to finance military operations.