Roughly one-third of Russia’s federal budget income now comes from oil and gas. In the 2010s it was 50%. That fall looks like progress, but the International Centre for Defence and Security argues in a report that hydrocarbons remain the backbone of the Russian economy, and the war depends on them.
Oil alone accounts for more than one-third of total export revenues, and the sector throws off wide spillover effects. Meanwhile military and security spending takes over one third of the state budget, as much as 40% once every security cost is counted. Put the two figures side by side and the link is hard to miss.
Sanctions, and where they leak
Since the full-scale invasion in 2022, the EU and its partners have targeted Russia’s energy exports and the technologies behind extraction, refining and transport. By the autumn of 2025 the EU had adopted 19 sanctions packages. The report estimates they have cut Russia’s cumulative oil and gas export earnings by about €100 bn since the oil price cap was introduced in December 2022.
The effect was smaller than it sounds. Global oil prices stayed elevated, partly because of the war itself, so Russia kept earning comparable or higher revenues until early 2025 even though it exported less energy than in 2022.
Europe also kept paying. EU countries have handed over an estimated €220 bn for Russian coal, oil and gas since the invasion, about 20% of Russia’s total energy earnings in that period.
The report’s verdict is blunt: western efforts have been incomplete. Sanctions are less stringent than they could be and suffer from enforcement gaps. It sets out to estimate Russia’s potential hydrocarbon export revenues through 2027, and it looks at political willingness in Europe, including how the rise of radical-populist parties might support or undermine stronger action.
What the authors want
Its recommendations are specific. A jointly enforced Western oil price cap near $30 per barrel, rigorously applied by the G7, would in the authors’ view cut Russian revenues significantly without destabilising global markets. Partners such as the UK, Norway and Canada could help enforce it by denying passage to vessels that are inadequately insured, improperly flagged or technically unsafe.
The EU, the report adds, should lower the existing cap on oil products and close the “refining loophole.” A faster exit from Russian energy would take billions of euros a year from Moscow with limited alternative markets to replace them. And it suggests targeted taxes or duties on remaining Russian energy imports, with the revenue earmarked directly for Ukraine.
