(MOSCOW) – Russia is selling gold and foreign currency from its National Wealth Fund at the fastest pace on record as falling oil prices and sanctions erode state revenues and expose the growing financial cost of the war against Ukraine.
The Kremlin has long portrayed Russia as economically resilient and shielded from Western sanctions. However, new data show that Moscow is increasingly relying on reserve assets to stabilise the federal budget as energy income declines sharply.
Oil and gas revenues, the backbone of the Russian state, are expected to fall by nearly half in January compared with the same period last year, according to official estimates. That represents a drop of about 46 percent and marks the steepest monthly decline since the start of the full scale invasion of Ukraine.
Russian crude prices have fallen to around 40 to 43 dollars per barrel in the Black Sea and Baltic Sea regions, far below the 59 dollars per barrel assumed in the 2026 federal budget. Analysts say the gap has created a structural shortfall that is increasingly difficult to cover through taxation alone.
The decline follows new United States sanctions imposed in October 2025 on major Russian oil producers Rosneft and Lukoil, which raised insurance and transport costs and further reduced demand for Russian exports. Ukrainian drone attacks on Russian ports and shipping infrastructure have also increased operational risks, adding to costs for exporters.
Russia has attempted to redirect energy exports to Asia as European markets have closed. Pipeline gas deliveries to China rose by about 25 percent in 2025, with exports through the Power of Siberia pipeline reaching nearly 39 billion cubic metres, up from 31 billion cubic metres in 2024. India has also become one of Russia’s largest buyers of discounted oil.
Despite higher volumes, analysts say Asian markets cannot replace lost European revenues. Russian crude is sold at deep discounts, while pipeline gas contracts with China offer lower margins and limit Moscow’s fiscal flexibility.
As revenues shrink, the Russian Finance Ministry has stepped up sales from the National Wealth Fund. Between mid January and early February, the government sold gold and Chinese yuan worth more than 2.5 billion dollars, the fastest drawdown since the COVID 19 pandemic.
Before the full scale invasion of Ukraine in 2022, the fund held more than 400 tonnes of gold. Officials say around 60 percent of those reserves have now been sold. Liquid assets in the fund are approaching 50 billion dollars, a level economists describe as a psychological threshold for fiscal stability.
The Kremlin has so far avoided public acknowledgement of the pressure, announcing no emergency measures and maintaining that sanctions have failed. However, economists warn that continued reliance on reserve sales signals mounting strain within an economy increasingly oriented toward war production.
Civilian sectors of the Russian economy have been in recession for several months, while defence spending continues to rise. Analysts say Moscow may soon face politically sensitive choices, including tax increases or further depletion of strategic reserves.
