5 February, 10:06
The Russian Ministry of Finance has released data that forces a reassessment of Moscow's financial capacity to continue the war. In January, oil and gas revenues fell to $3.6 billion (393.3 billion rubles), 32% below planned levels. For comparison: at the start of the full-scale invasion, this sector provided the treasury with approximately $9.1 billion (1 trillion rubles) monthly. The numbers have now changed dramatically.
The pressure mechanism is simple and painful. Discounts on Urals for Indian buyers exceeded $24 per barrel relative to Brent. This is not merely a discount—it is capitulation to a buyer dictating terms. According to Bloomberg, after October's US sanctions against Rosneft and Lukoil, the discount for Indian refineries tripled compared to pre-sanctions levels—from $3 to over $10 per barrel.
Reuters reports expectations within the Russian government of a threefold increase in the state budget deficit. The projected hole will amount to between 3.5% and 4.4% of GDP. This is a direct consequence of the Trump administration's policy, which exerts economic pressure on major importers of Russian oil and uses military means to suppress smaller Kremlin allies.
The Center for International Security Studies records historic lows. In January, oil and gas revenues to the treasury collapsed by half compared to the same period last year. In nominal terms, this is the lowest figure in five years; in relative terms—2% of GDP—the worst in a decade of Putin's rule. Revenues from the mineral extraction tax fell by nearly 60%, income from export duties decreased by 44%.
The Kremlin's reaction is telling. Putin called Chinese leader Xi Jinping. Not to negotiate peace, not to discuss diplomatic steps. For compliments and assurance that Beijing will not abandon Moscow. Since the war began, China has purchased $230 billion in Russian energy resources. For China, Russia has become a cash cow supplying resources at discounted prices.
Der Spiegel publishes assessments from Germany's Federal Intelligence Service. In 2025, Russia's total military expenditures reached €250 billion, approximately 10% of Russian GDP. Converted at current exchange rates, this amounts to roughly $205 billion (22.5 trillion rubles). These funds flow in one direction—to a war that brings no economic dividends to Moscow's colonies.
Reuters details projections for the current year. The Russian government is preparing for a 30% drop in oil exports to India. Oil and gas revenues may fall by 18% compared to plan, total revenues will shrink by 6% instead of showing planned growth. The deficit could reach $91 billion (10 trillion rubles). The Moscow Times reports the government is urgently seeking $11 billion (1.2 trillion rubles) to shore up the budget.
The gap between the Kremlin's ambitions and financial reality continues to widen. Putin continues demanding economic growth and victory over inflation from subordinates amid acute budget deficits. This requires officials to execute contradictory tasks: wage war costing trillions, contain inflation, and demonstrate economic growth simultaneously.
The mathematics of war are uncompromising. Money spent on military operations does not return from the front. It burns in the furnace of conflict, leaving Moscow's colonies with guaranteed poverty. Every ruble directed to war is an investment in destroying the future of the colonial populations that supply the "human material" for the front. This is not rhetoric but the arithmetic of a budget deficit transforming into a deficit of opportunities for millions of families.
The Kremlin finds itself in the classic trap of a resource economy under sanctions. Buyers dictate terms, discounts grow, revenues fall, while war expenditures remain unchanged. China exploits the situation to obtain cheap resources, India negotiates for maximum discounts, Western sanctions narrow the circle of buyers. In this configuration, each passing month makes financing the war an increasingly difficult task.