Russia’s shrinking oil exports

Russia’s capacity to fund her war effort against Ukraine continues to hinge upon her ability to sell crude oil and petroleum products abroad. For more than three years, Moscow has relied principally on seaborne exports, with a large portion of those shipments carried through a complex network of sanction-evading tankers known informally as the shadow fleet. In late 2025, Ukraine has intensified her efforts to disrupt not merely infrastructure on land but this maritime lifeline itself, applying military pressure in concert with Western sanctions to squeeze Russia’s revenue stream and reduce export volumes.

The consequence of this strategy is not a sudden cessation of Russian oil exports; rather, it is an erosion of economic terms of trade — lower realised prices because of deeper discounts and rising export risk, coupled with logistical bottlenecks that reduce volumes over time. By mid-December 2025, a consensus among analysts and energy agencies was emerging that Russian export revenues had fallen to levels not seen since before the full-scale invasion in 2022. 

The shadow fleet at the centre of the battle

The shadow fleet comprises hundreds of older tankers that operate at the margins of global compliance frameworks: they often sail under flags of convenience, switch registries, turn off tracking transponders and rely on ship-to-ship transfers to obscure cargo origins. Such practices allow Russia to sidestep direct engagement with Western-affiliated insurers and financiers who face penalties under sanctions if they assist sanctioned oil shipments. 

Recent Western measures explicitly target this network. As of mid-December, the European Union adopted sanctions against individuals, companies and vessels linked to the shadow fleet in an effort to degrade the system that keeps Russian crude flowing despite embargoes and restrictions. 

According to energy trackers, sanctioned or high-risk vessels have carried a large majority of Russian crude shipments in recent months, illustrating the fleet’s pivotal — and vulnerable — role in Moscow’s oil export strategy. 

Ukraine’s maritime strikes: an escalation in strategic targeting

Ukraine has expanded her campaign at sea. Over recent weeks Ukrainian sea drones have struck multiple tankers associated with the shadow fleet in the Black Sea, disabling at least one vessel and damaging others — operations carried out despite those ships hiding identifying transponder data. 

Beyond tanker strikes, Ukrainian forces have struck oil infrastructure at greater distances from the front: platforms in the Caspian Sea have been hit repeatedly, halting operations on some facilities, and long-range drone and missile strikes have damaged refineries and storage terminals within Russia. 

In parallel, Ukrainian drones have targeted energy infrastructure across Russia on 17–18 December 2025, including refineries and river vessels — underscoring the breadth of Kyiv’s campaign to squeeze Russia’s energy export capability. 

Export volumes, pricing and revenue contraction

The International Energy Agency and independent analysts have reported that Russian oil and product export revenues plummeted in November 2025 to their lowest level since the start of the full-scale war. That decline reflected not only lower volumes but also heavier price discounts on Russian crude grades compared with global benchmarks. 

Bloomberg data has pointed to Russian crude being sold for just over $40 per barrel — the weakest pricing since the war began — deep discounts driven by sanctions, delivery risk and a global market where benchmarks continue to languish. 

The implications of this dual squeeze — falling volumes and prices — are profound for the Russian federal budget, which relies heavily on oil and gas revenues to finance both civilian and military expenditures.

The disruption of oil transport logistics has raised costs for the global shipping industry. Western sanctions on carriers, combined with heightened risk perceptions, have pushed tanker rates to multi-year highs, even as the global fleet ages and available compliant vessels dwindle. 

For Russia this means not only that revenue per barrel is lower, but that the effective cost of moving oil has risen. The main buyers of Russian oil, in India and China, have to tolerate longer voyage times and Russian carriers, adding to financial strain.

Sanctions enforcement and adaptive pressures

Western policymakers, particularly within the European Union, are intensifying sanctions enforcement on tankers, traders and logistics enablers tied to the shadow fleet. New measures envisage more frequent vessel listings and targeted asset freezes, aimed at closing loopholes that have allowed Russia’s oil export system to persist. 

However, observers also note that despite increased sanctions, the shadow fleet has shown resilience through renaming, reflagging and corporate restructuring — requiring sustained enforcement and international cooperation if meaningful leakage is to be prevented. 

Looking beyond discrete strikes

A useful way to frame Ukraine’s strategy is to see it not as a quest to obliterate Russian oil exports outright — which is both politically and militarily infeasible in the near term — but to increase the friction cost of those exports. By making shipping riskier, insurance more costly, sanctions tougher and pricing lower, Ukraine and its partners are progressively tightening the economic noose around Moscow’s cash flow.

From a fiscal perspective, even a marginal reduction in export revenue can have outsized impact over time: oil revenues account for a substantial share of federal receipts and are a primary funding source for Russia’s war machine. 

As of today Russia’s oil export machine is under multi-pronged pressure. Ukrainian strikes on the shadow tanker fleet and energy infrastructure, coupled with escalating Western sanctions, have contributed to reduced export revenues, deeper price discounts and systemic risk in maritime transport.

While Russia’s exports have not vanished, the economic value of each barrel sold is being eroded, and the operational friction in moving oil is rising. That combination is squeezing Moscow’s capacity to convert energy resources into war finance, and it signifies an evolving phase of economic warfare in which Ukraine is increasingly targeting the maritime conduits of Russia’s fossil fuel economy rather than just her land-based assets.