(KYIV, UKRAINE) – Global oil and gas prices have continued to fall into 2026, adding financial pressure on Russia as it sustains its war against Ukraine. Lower energy revenues are reducing one of Moscow’s most important sources of income and limiting its ability to fund military operations.
According to official figures from Gazprom, Russia’s state controlled gas company, gas exports to European countries in 2025 were around 44 percent lower than in previous years. This represents the lowest level of Russian gas sales to Europe since the early 1970s, reflecting Europe’s accelerated efforts to reduce dependence on Russian energy supplies.
The decline has been driven by sanctions, infrastructure damage, alternative suppliers and long term policy changes across the European Union. For European states, the reduction is seen as a strategic shift away from energy reliance that Russia previously used as political and economic leverage.
Oil markets have also moved against Russia. Benchmark crude prices, including Brent and West Texas Intermediate, were around 20 percent lower in 2025 compared with recent averages and are expected to remain under pressure in 2026. For Russia, this is particularly damaging as its oil exports are already constrained by sanctions and logistical risks.
Russian oil is increasingly sold at heavy discounts to attract buyers, especially in Asia. Analysts note that in some cases the export price may be close to or below production costs, leaving little or no profit. Moscow has continued selling in order to avoid shutting down oil fields, which can cause long term damage to production capacity.
Indicative impact on Russian energy revenues
| Indicator | Recent trend |
|---|---|
| Gas exports to Europe | About 44 percent decline |
| Oil benchmark prices | About 20 percent lower |
| Oil export pricing | Heavy discounts to buyers |
| Budget position | Large and growing deficit |
As a result, Russia’s state budget is under increasing strain, with large shortfalls reported in rouble terms. Energy income has traditionally funded a significant share of public spending, including defence, and falling revenues limit fiscal flexibility.
At the geopolitical level, Russia is also facing challenges to its influence in key partner countries. Protests in Iran and wider instability in the Middle East come as Moscow has already seen its role reduced in Syria and in regional diplomacy involving Armenia and Azerbaijan. Any major political change in Iran could weaken an important relationship that has included military and technological cooperation.
Ukrainian officials have also highlighted Iran’s role in supplying drones used by Russian forces against Ukrainian cities. Kyiv has repeatedly stated that it distinguishes between the Iranian population and the policies of its government, while closely monitoring developments in the region.
On the battlefield, Russian forces continue to carry out missile and drone attacks. In recent days, the city of Kharkiv was struck during daylight hours, with residential buildings hit and civilians injured. Ukrainian authorities say such attacks reinforce the risks of negotiating with Moscow without clear security guarantees.
At the same time, Ukraine has announced changes in its senior leadership. Kyrylo Budanov, the head of military intelligence, has taken on a new role as head of the President’s Office. Ukrainian officials describe the move as aimed at strengthening coordination during wartime.
Ukrainian intelligence has also reported a recent operation in which funds allegedly intended by Russian security services to support an assassination were intercepted and redirected towards Ukraine’s defence needs. Kyiv says such operations reflect weaknesses within Russian intelligence structures.
Taken together, falling energy prices, reduced exports and geopolitical setbacks are increasing pressure on Russia as the war continues.
