Russia’s old oil power is gone – This is how the Kremlin became the market’s throwaway bag

Russia is no longer a global oil superpower.

During the war in Ukraine, Russian crude oil production has remained relatively stable: both in the summer of 2022 and in the summer of 2025, the Russian Urals was pumped at a rate of about 9.8 million barrels per day.

In the big picture, Russia’s share of world oil production has dropped only slightly: from 12 percent to 11 percent, writes energy market expert Tatjana Mitrova. The share in the oil trade, on the other hand, has decreased from 13 percent to 11 percent.

The numbers can be confusing. Behind them lies an unfavorable change in the dynamics of the oil market for Russia. Western sanctions on Russian oil have deprived the Kremlin of its ability to function effectively as part of the clique of states that determine the price level of the oil market.

Russia’s position in the Opec+ organization of oil exporters has changed from a central price lever turner to a passive member that has to leave the implementation of oil market decisions to others, Mitrova analysed.

This is due to the fact that Russia has few options in terms of the buyer’s market. Exports to the West are almost blocked, so the oil has to be sold to the Asian market. India, China and Turkey have taken advantage of the situation by demanding continuous discount sales.

When the European market is closed, Russia will not be able to balance the oil market by directing its export flows between European and Asian markets according to the situation. Before 2022, as part of Opec+’s supply cuts, Russia was able, for example, to reduce its exports to Europe, which allowed the cartel to push up the price of the globally important Brent oil quality. Russia was able to move its production to Asia with a small discount, so pumping did not have to be reduced immediately.

There is no such market flexibility in Russia anymore. Force dictates the strategy: sell oil to Asia. For a country struggling with the problems of its military economy rising oil prices would be a relief. In the absence of this view, the best solution is to take what can be taken.

Great powers are not defined by their size – or production volume – but by their ability to act according to their will. As far as oil is concerned, Russia has now found itself in the position of a subordinate.

The Saudis set the pace

Saudi Arabia, the leader of the Opec+ group, has taken an even bigger role in balancing the market, for example by making additional production cuts. It has also shown that it considers Russia’s interests secondary.

Last year, Saudi Arabia began to pursue a larger global market share for the cartel, even with the threat that it would mean oil a further decrease in the price level. The decision was a reaction to growing oil production in countries outside the organization, which is a threat to the power of the Opec cartel. The European Central Bank takes notethat a similar bet in 2014 helped the market price of oil plunge by more than a third in just a few months. This time, such a big shock is still not in sight, the ECB states.

From the perspective of Russia’s military economy, the Saudis’ goal is harmful, and The Kremlin is estimated to have protested against it. In November, Opec+ put production increases on hold until the end of March, due to the threat of oversupply. The solution was also a relief measure for Russia, which had just received the Rosneft and Lukoil sanctions.

The Kremlin really needs a piece of mercy. This year, the federal government has budgeted about 44 trillion rubles, or just under 500 billion euros, while in 2021 the expenditures were in the order of 25 trillion rubles. However, tax revenues from the oil and gas sector are expected to be the same 9 trillion rubles.

This estimate is also optimistic, as the price of a barrel of Urals has been hanging 6-10 dollars below the target level of 59 dollars at the beginning of the year. Analysts’ predictions about the price of crude oil in 2026 do not bode well for the Kremlin’s budget.

Problems are piling up in Russia

The Kremlin has begun to cover the burgeoning costs of its military economy with increasingly heavy taxation throughout society. The energy sector, with its 20 percent share of the gross domestic product, is the cornerstone of the Russian economy, so its weak appeal is reflected everywhere else. Economic growth is under a rock.

Sanctions, the withdrawal of international partners and the weak outlook for energy trade have driven the Russian oil industry on the road to decline. Investments are solid, not to mention foreign ones. Arctic energy projects, such as Rosneft’s already postponed Vostok Oil project for a couple of years, suffer sanctions. The Russians lack western know-how and technology, which they use in pumping challenging Arctic deposits.

Russia’s crude oil production capacity is on the decline, according to the International Energy Agency (IEA). In 2024 it was 9.53 million barrels per day, in 2030 possibly 9.47 million.

The Kremlin has acknowledged the situation and stated that the importance of the energy sector in the entire economy is decreasing. Harnessed deposits will inevitably dwindle, and capacity will not increase if new ones are not invested heavily. The IEA recently warned about this: even a relatively small drop in investments in oil drilling can cause production volumes to stagnate.

If the same spending continues, it could create problems in the future in meeting the production quotas outlined by Opec+, which would further erode Russia’s position as an oil power. Difficulties are already in the air: in November, Russia was short of half a million barrels per day from the monthly quota outlined by the cartel.

The game board is changing

Russia’s oil power in the big game of geopolitics is weakening anyway. The takeover of Venezuela’s oil resources by the United States provoked bitter reactions in Russia, as Washington increases its power to define global oil prices. The importance of Russian oil estimated to sink in the medium and long term.

Russia’s biggest oil customers, India and China, have shown their bluntly pragmatic approach to Russia’s oil supply. When the Rosneft and Lukoil sanctions came into effect at the end of the year, Indian oil refiners radically reduced imports of the Urals and the Chinese, who were more established as a major customer, started to take the reins even bigger discounts.

To restore its position as a major power in the oil market, Russia would need substantial investments, cutting-edge technology, sanctions relief and a return to the European market. None of these are currently on the horizon.