Russia’s oil sector is collapsing and ‘unprofitable’

The Russian oil industry is struggling under severe tax burdens, making both production and exports increasingly unprofitable, according to Russian Energy Minister Anton Rubtsov.

Rubtsov acknowledged that revenues from oil sales have declined, posing a serious challenge as these funds are critical to financing the war in Ukraine.

According to Reuters, Russia’s oil and gas revenues dropped by one-third in May compared to the same period last year, falling to 0.52 trillion rubles ($6.48 billion)—the lowest level since July 2023.

Western sanctions continue to erode Kremlin income, forcing Moscow to rely on its so-called "shadow fleet" to circumvent restrictions and deliver oil covertly to willing buyers.

"The tax burden is so substantial that today many options to maintain production are simply unprofitable," Rubtsov said.

The European Union has already imposed sanctions on Russia’s shadow fleet, and another sanctions package is reportedly in the works. Meanwhile, Donald Trump has hinted that he would consider further targeting Russia’s oil industry if no peace deal is reached with Ukraine.

(QG - Source: Newsweek — Picture : © Unsplash)