Within the good previous days, when Russian President Vladimir Putin was in his prime and relations with the West had been in respectable form, it was frequent to name Russia “an power superpower.” By the 2000s, oil and pure gasoline exports boosted the nation’s progress and enhanced Putin’s legitimacy. Vitality added to Moscow’s geopolitical clout, too, not least in Europe. Even after the annexation of Crimea in 2014, European Union members pressed forward with pipeline tasks reminiscent of TurkStream and Nord Stream 2.
However the “superpower” a part of the story is now over. As of 2025, it’s clear that power is as a lot a vulnerability as it’s an asset. Among the many elements making this apparent are Ukrainian strikes in opposition to Russian infrastructure, the EU’s phaseout of Russian oil and gasoline purchases, and U.S. sanctions on Rosneft and Lukoil. Consequently, Russia’s leverage overseas will proceed to dwindle as its financial challenges at dwelling proceed to rise.
Within the good previous days, when Russian President Vladimir Putin was in his prime and relations with the West had been in respectable form, it was frequent to name Russia “an power superpower.” By the 2000s, oil and pure gasoline exports boosted the nation’s progress and enhanced Putin’s legitimacy. Vitality added to Moscow’s geopolitical clout, too, not least in Europe. Even after the annexation of Crimea in 2014, European Union members pressed forward with pipeline tasks reminiscent of TurkStream and Nord Stream 2.
However the “superpower” a part of the story is now over. As of 2025, it’s clear that power is as a lot a vulnerability as it’s an asset. Among the many elements making this apparent are Ukrainian strikes in opposition to Russian infrastructure, the EU’s phaseout of Russian oil and gasoline purchases, and U.S. sanctions on Rosneft and Lukoil. Consequently, Russia’s leverage overseas will proceed to dwindle as its financial challenges at dwelling proceed to rise.
Initially, within the aftermath of its 2022 full-scale invasion of Ukraine, Russia seemed to be doing effective. Regardless of the Western restrictions—a G-7 oil value cap and an EU ban on coal and seaborne crude imports—Russian exports of crude stayed at a steady 5 million barrels per day. China, India, and Turkey picked up the slack as Western clients shifted to non-Russian suppliers. Refined product discovered its strategy to the European market. Russia’s infamous shadow fleet offered a workaround for the value cap (which presently stands at $47.6 per barrel). Furthermore, Russia was capable of change a number of the gasoline flows from the EU to China, the place gross sales jumped from 16.5 billion cubic meters (bcm) in 2021 to a report 31 bcm in 2024. Throughout Putin’s go to to Beijing in September, China and Russia signed a deal on the Energy of Siberia 2 pipeline, which may add one other 50 bcm. Consequently, Russia’s annual power revenues averaged round $190 billion, or round 9 p.c of its nominal GDP, in 2024.
But that is now prone to change if U.S. President Donald Trump’s oil sanctions are enacted and enforced as declared. Oil is much more necessary to the Russian economic system than gasoline, and Rosneft and Lukoil account for round 50 p.c of Russia’s upstream manufacturing of it. The state-owned Rosneft alone contributes about 17 p.c of the Russian Federation’s finances revenues. The Biden administration was reluctant to go after these firms for worry of driving world oil costs up and hurting U.S. customers. Earlier than leaving workplace in January, it selected to hit Gazprom Neft and Surgutneftegas, two smaller outfits. And Trump beforehand wasn’t excited about sanctions in any respect.
Now, nonetheless, with the US taking motion, we’ll begin to see extra dramatic outcomes. Crucially, the U.S. authorities seems to have coordinated with the EU and United Kingdom. Final week, the EU adopted the nineteenth sanctions package deal in opposition to Russia, which incorporates measures reminiscent of blacklisting 117 extra vessels from its shadow fleet. On Oct. 15, the U.Okay. unveiled sanctions in opposition to Rosneft and Lukoil, as nicely, alongside sanctions on India’s Nayara refinery, 4 oil terminals in China, and 44 shadow fleet vessels. The brand new sanctions could not dissuade India from shopping for Russian crude, however they may complicate doing enterprise with the Russian majors as financing, insurance coverage, and delivery prices go up.
Russia’s oil earnings had been already falling. Within the first half of 2025, revenues slumped by 17 p.c year-on-year. Now, all that continues to be to be seen is how aggressively U.S. secondary sanctions shall be utilized in opposition to refiners and merchants, who might be denied entry to the U.S. market and monetary system, whereas going through civil and even legal instances, as nicely. China and India seem to have decreased and even suspended oil purchases. But they will resume imports, ought to the Trump administration shift its focus away from Russia. Moreover, each Rosneft and Lukoil maintain belongings throughout Europe and elsewhere on the planet. In the event that they in some way win exemptions, the sanctions’ influence shall be mitigated—like what occurred with the sooner spherical of sanctions launched by the Biden administration. The privately-owned Lukoil introduced it might be promoting its worldwide belongings.
Ukrainian strikes on Russian oil infrastructure have additional exacerbated the sanctions’ influence. Since August, drones have hit 21 of Russia’s 38 giant refineries which have a mixed capability of round 123 million tons per yr or 45 p.c of Russia’s whole output. Mixed with strikes in opposition to storage and pipeline capability, the overall harm is estimated at about $706.5 million. Whereas a big share of these services have been repaired, these strikes have additionally pressured Russia to shift its exports from refined product to crude oil, which reduces earnings. As power professional Sergei Vakulenko put it, “Russia’s refineries are like a person being repeatedly punched—not killed by any single blow, however regularly worn down.” Now, gasoline shortages are beginning to have an effect on peculiar Russians as a number of areas have reported empty filling stations and contours of motorists.
In Europe, Russia’s as soon as fearsome gasoline weapon has additionally misplaced its drive. In 2021, Russia accounted for 45 p.c of the EU’s gasoline imports. Now, that share is right down to 11 p.c, as liquefied pure gasoline (LNG) from world suppliers, together with the US, replaces Russian imports. This week, EU power ministers permitted laws that requires firms to part out long-term contracts—whether or not pipeline gasoline or LNG—by the top of 2027. The deadline for many short-term contracts is subsequent January. Consequently, even Russia-friendly nations reminiscent of Hungary and Slovakia should discover different suppliers.
In fact, a few of Russia’s gasoline would possibly nonetheless find yourself in Europe through intermediaries reminiscent of Turkey and Azerbaijan. Turkey has lengthy voiced ambitions to be a gasoline hub, reexporting gasoline from neighboring nations to European clients at a revenue. However whereas this would possibly lead to restricted earnings for Russia, it received’t include geopolitical affect. So long as commerce goes by a middleperson, the Kremlin received’t be capable of leverage it to construct cozy relationships with governments and nationwide champions all through Europe. Nor can it use the specter of provide disruption as an instrument of strain.
Lastly, China is not any substitute for Russia’s lack of the European market. Even after the Energy of Siberia 2 pipeline, which is able to join Urengoy in northern Russia to China’s gasoline grid through Mongolia, comes on-line, its quantity can be far under the 155 bcm that the EU imported in 2021. And Beijing is driving a onerous discount on the value and different business circumstances across the contracts with Russia. Russia will in all probability take a Chinese language mortgage to finance the pipeline’s building, and will probably be receiving funds in yuan, tying it even nearer to China. Notably, Moscow dragged its ft on this mission for years, accepting most of Beijing’s circumstances solely after Crimea’s annexation. Now, it faces extra isolation and worse phrases.
Within the meantime, decreased overseas gross sales create compounding issues at dwelling. Gazprom reported losses to the tune of $6.9 billion in 2023 and $12.9 billion in 2024. Home costs have risen by roughly 30 p.c for the reason that begin of the warfare, including to Russia’s downside with inflation. That is nonetheless comparatively low compared to different nations, however it’s now not doable to subsidize Russian households with the receipts from gross sales to premium EU clients. To keep up stability, the federal government should dip deeper into the state finances. Moreover, funding into new fields and infrastructure is stagnant as cash grows brief and entry to worldwide funding and expertise is reduce off.
Russia remains to be a serious participant on the world’s power market. It accounts for round 10 p.c of worldwide oil manufacturing and 15 p.c of worldwide pure gasoline manufacturing. The Russian economic system has confirmed resilient, with the likes of China and India serving to Moscow fend off Western sanctions. However what analysts name army Keynesianism—pumping cash generated by the sale of commodities overseas to spice up the protection industries, salaries within the state sector, and welfare spending—is operating its course. On prime of the human and political prices of the warfare, Russia pays the value for overheating its economic system. With progress falling from 4.3 p.c of GDP to a projected 1-1.3 p.c in 2025 and 2026, new Western power sanctions are including to continual stagnation.
Ultimately, Russia was unable to successfully use oil and gasoline as a way of coercion. Even the specter of hovering costs has not deterred its Western adversaries from sanctioning its power belongings. In truth, the worldwide oil market has remained surprisingly steady, as OPEC+ introduced plans to boost output. The commerce in hydrocarbons definitely helped Russia purchase favor and deepen interdependence when occasions had been good. However when the going bought robust, Moscow found that buyers wield as a lot energy as producers.
