Moscow is facing a deepening fiscal crisis as declining oil and gas revenues – exacerbated by Western sanctions and a shifting global energy landscape – sharply curtail the Kremlin’s ability to fund both it’s military operations in Ukraine and domestic programs. New data reveals Russia’s energy income has plummeted to a five-year low, forcing the government to draw down its National Wealth Fund and gold reserves at an accelerating pace. The situation,detailed in recently released Finance ministry figures and autonomous analysis,raises questions about the long-term sustainability of Russia’s war effort and its broader economic stability,with some analysts warning of potential inflationary pressures and further economic contraction in 2026.
Declining oil prices and gas export volumes have taken a significant toll on Russia’s budget, reducing crucial energy revenue needed to finance the war in Ukraine to its lowest level in five years.
Russia’s Energy Revenue Crisis
The Russian Finance Ministry reported approximately $108 billion in tax revenue from oil and gas in the past year – a 24% decrease compared to 2023, marking the largest drop since the beginning of the decade. By December 2024, Russia’s budget revenue from oil and gas exports had halved compared to the previous year, falling to $5.3 billion, the lowest figure since August 2020, according to Reuters. The decline in energy income is a critical development, as it directly impacts Russia’s ability to fund its ongoing military operations.
National Wealth Fund Depleted
In response to the dramatic fall in oil and gas revenue, the Putin administration has spent more than half of the National Wealth Fund (NWF) and nearly three-quarters of its gold reserves. “For the third year in a row, the Russian government has been forced to sell off its NWF gold reserves to cover the costs of the war and other federal budget expenses, finance state banks, and pay for megaprojects,” reported The Moscow Times. In January, the government covered lost oil and gas revenue with approximately 230 billion rubles (around $3 billion) from the NWF.
Data published by the Russian Finance Ministry shows that the NWF’s gold reserves decreased by 71% between 2022 and 2025. On January 1, 2026, the Central Bank held 160.2 tons of gold, compared to 554.9 tons in May 2022. The fund’s reserves saw a slight increase last year – by 350 billion rubles (approximately $4.5 billion) – but remain almost 60%, or 5.6 trillion rubles (around $72 billion), lower than pre-war levels.
The Finance Ministry had not planned to draw from the NWF in 2026, hoping to preserve the remaining reserves accumulated through oil revenue. However, those plans have been disrupted.
Sanctions imposed by the Trump administration undermined those plans: the average price of Russia’s flagship export crude, “Urals,” fell to $39, instead of the $59 budgeted. Compared to November, the price of “Urals” dropped by 13%, and by more than 40% since the beginning of 2025. VTB Bank analysts predict that if oil prices and the ruble exchange rate remain at current levels, 2.5 trillion rubles (approximately $32 billion) – around 60% of the remaining funds – will be spent from the NWF by the end of the year.
From January 16 to February 5, the Russian Finance Ministry sold gold and Chinese yuan worth 12.8 billion rubles (approximately $163 million) daily from the fund’s reserves, totaling 192.1 billion rubles (approximately $2.5 billion). The volume of transactions under the government’s “budget rule” will be a record high, exceeding the pandemic-era peak of 11.4 billion rubles per day, according to the Kremlin news agency Interfax.
Analysts at the “MMI” Telegram channel, which focuses on Russian and global macroeconomics and markets, believe the situation is even worse than it appears. They suggest that Russia’s budget could lose 2.5-3 trillion rubles (approximately $32-38 billion) in oil and gas revenue in 2025, potentially “completely draining” the NWF. As of the beginning of 2026, the fund’s liquid assets in currency and gold reserves totaled 4.1 trillion rubles (approximately $52 billion).
Following the collapse in Russian oil prices, the Finance Ministry announced it would indefinitely postpone the monthly publication of data on oil and gas revenue in the federal budget. The latest report was removed from the ministry’s website, leaving the government with little choice but to continue depleting the National Wealth Fund, which was built up from energy resource sales.
Budget Losses Mount
The combination of falling oil prices, a strengthening ruble, and sanctions resulted in a loss of 2.5 trillion rubles (approximately $32 billion) in oil and gas revenue for the federal budget in 2025. The Finance Ministry revised the 2025 budget in the autumn, sharply reducing its forecast for oil and gas revenue and tripling the deficit. Even with the new forecast, revenue fell short by 0.2 trillion rubles (approximately $2.5 billion). “Judging by the current dynamics of oil prices, the situation will remain difficult this year as well,” warned Natalia Orlova, chief economist at Alfa Bank.
The Finance Ministry planned to collect 8.9 trillion rubles (approximately $114 billion) in oil and gas taxes in 2026. However, economist Dmitry Polevoy estimates that actual revenue will be 1.1-1.4 trillion rubles lower.
To cover the shortfall, the government increased VAT from 20% to 22%, corporate income tax from 20% to 25%, and various duties and excise taxes in 2026. It also introduced a differentiated income tax scale and pledged to collect an additional 3.6 trillion rubles (approximately $46 billion). These measures proved insufficient.
Revenue increased by only 1.6%, or 575 billion rubles (approximately $7.4 billion), and in real terms, adjusted for inflation, began to decline. Economist Viktor Tunev notes that Russia’s budget system revenues, including regional budgets, the Pension Fund, and the Compulsory Medical Insurance Fund, have remained virtually unchanged for the third consecutive year. “We raise taxes every year, but they don’t bring anything into the budget. Revenues are constantly decreasing both in real terms and as a percentage of GDP.”
“After the economic situation deteriorated, actual budget revenues were significantly lower than planned,” said Emil Ablayev, an expert at the Center for Macroeconomic Analysis and Short-Term Forecasting (ЦМАКП). Economic growth slowed to almost zero, corporate profits declined, and foreign trade revenue decreased due to growing sanctions pressure.
“This year will be worse. NGI is calculated based on an ‘Urals’ oil price of $59 per barrel and an exchange rate of 92.2 rubles per US dollar, or 5440 rubles per ‘Urals’ barrel, while the current market price is 3100 rubles. With this price, the NGI deficit is at least 3 trillion rubles (~$38 billion), so the National Wealth Fund will be spent to zero, and covering the budget deficit will involve activating emission mechanisms,” the “MMI” channel commented. Spending from the Welfare Fund to patch budget holes creates the same emission effects as borrowing from the Central Bank of Russia or commercial banks. In 2026, hidden emissions will fuel high inflation, regardless of what the State Statistics Service reports.
The Economic Toll of War
“It looks like it will be impossible to control the Russian economy by the end of the year – it is falling apart at the seams,” commented the “Призрак экономики” Telegram channel. The government is already struggling to conceal problems, as the economic downturn and collapse of civilian production are becoming apparent, exacerbated by the Central Bank’s high interest rates. Even according to official forecasts and government reports, economic growth may not remain above zero by the end of 2026. U.S. sanctions are working. It is time to pay the bills for the militarization of the economy, which cannot withstand ‘eternal war’ and is already failing to do so, no matter how much the Kremlin would like it otherwise. 2026 began with rather gloomy news for the Russian economy, according to the “Proeconomics” Telegram channel:
- A decline in oil export revenue in December. There is a shortage of foreign currency, and ruble devaluation increases inflation, which is already rising rapidly, reducing demand for imports.
- Inflation from January 1-12: 1.26%. A similar price increase in January has not been seen since 2015, when it reached 3.9% and 12.9% for the year. However, the rapid price increase in 2015 was largely due to ruble devaluation. Currently, the Russian ruble is stable.
- A boom in consumer lending in December 2025. Russians are rushing to take out express loans, even with excessively high interest rates, which can be explained by observations and conclusions about the true level of inflation. It is also a kind of vote of no confidence in all the efforts of the Central Bank of Russia, which claims to have almost coped with inflation, while consumers believe that growth is yet to come.
- A decline in sales of new trucks in 2025, an indirect indicator of business activity and forecasts for the business environment: private investment is low and continues to decline, as it is time to “tighten belts, survive, not expand.”
- A decline in labor market activity. Data from Headhunter, Russia’s largest online personnel selection company, shows that labor demand is critically low and has almost stopped, especially in Moscow and St. Petersburg, where the labor market has become a job seeker’s market. And this is not the whole list of bad economic news. “The Kremlin blames the Central Bank of Russia and the Finance Ministry for the economic cataclysms, expecting miracles from the state administration bodies, but miracles do not happen and the current situation is beyond their competence. Rather, it should be borne by the agencies responsible for foreign policy and the situation in Ukraine,” the channel commented.
Underlying the Decline: War and the Collapse of Russia’s Energy Empire
“At the beginning of 2026, Russia has completely transformed into a ‘shadow economy state.’ Previously, Russian officials of all ranks hid property and offshore accounts abroad, today the state hides oil under foreign flags. The re-marking of sanctioned dual-use goods and ‘gray import’ schemes have become a separate sector of the economy, while Russia’s share in the world economy still does not exceed 2%,” commented the “Незыгарь” Telegram channel. But at the beginning of 2026, the situation changed rapidly.
“We are witnessing the dismantling of the Russian energy empire, which has lost the European market, and sanctions and tariffs will destroy all its shadow export routes,” concludes American journalist Seymour Hersh. Since the full-scale invasion of Ukraine, the price of Russian oil has fallen sharply, export volumes are less than 3.5 million barrels per day, and revenues have decreased by a quarter.
For some time, the market economy and the private sector saved the situation, but now they are under pressure from fiscal and security agencies. Russia lacks money, investment, and technology. The National Wealth Fund is almost depleted, and tankers are being detained. U.S. President Donald Trump intends to push oil prices down to $50 and increase the U.S. military budget to $1.5 trillion by the beginning of 2027, according to
