RUSSIA Down

Added: 2026-05-07

[00:00:00]Hi, welcome back to the channel. In today's episode, I want to talk to you about the latest data that's been released for Russia's oil and gas revenues for the first five months of 2026. And what it shows is that the financial pressure on the Russian economy is not easing, it's actually increasing. Because despite rising oil prices, despite strong global demand, despite Russia's rrooting exports, and despite the USA introducing an extension on the sanctions waiver allowing Russian oil already on tankers to continue flowing around the world, Russia is still earning less money today than it did a year ago and significantly less than it was earning before the war in Ukraine started. Now, before we get into all of the details on that, could I ask anybody that hasn't hit that subscriber button to please hit it now? Uh, really helps me with the algorithm and also puts a smile on my face. So, let's start with the latest numbers. The latest data released by Reuters shows that Russia's oil and gas revenues for the period between January and May 2026 are around 2.94 trillion rubles. And that compares with 3.16 trillion rubles for the same period in 2025. So that's decline of around 220 billion rubles or around 7% year onyear. And that is the key headline because when you strip everything else away, Russia is still going backwards. Now if we just look at May in isolation, the picture appears more positive. May 2026 is expected to come in at around 650 billion rubles compared with around 513 billion for May 2025. So that represents an increase of roughly 27% year onyear. Now you might be thinking, hang on a minute, Joe, how come you're talking about the May figures when we're not at the end of May yet? Well, in oil and gas revenues, there is a big lead time. You don't just phone up and say, "Can you deliver me 2 million barrels of oil tomorrow morning, please?" And somebody puts it onto a ship and sends it straight round. You have long lead times and so you know exactly what your figures are a long time before the end of the month. But in terms of the detail, this is where it gets really interesting because the improvements in May itself is not being driven by improvements in the Russian economy. It's being driven by external temporary factors. We've seen rising global oil prices, supply concerns linked to geopolitical tensions, particularly involving the war in Iran, and short-term disruption to global energy markets. And on top of that, there's been direct policy support from outside of Russia because the United States introduced a temporary sanctions waiver initially for 30 days, which has now been extended for another 30 days, allowing Russian oil that was already at sea in tankers to be delivered to buyers globally to basically balance the problem that global supplies had as a result of the closure of the straight hover muz. So, in simple terms, more oil in May got through at higher prices over a short period of time. But even with all of that support, it hasn't been enough to offset the weakness from earlier in 2026 because the first quarter was particularly weak from Russia's perspective. Oil prices were lower at the start of the year. They were sitting at around $60 per barrel compared with around $90 now. The ruble was relatively strong, reducing export revenues in local currency terms, and income dropped sharply as a direct result. So, what we're seeing now is not a recovery. It's a partial rebound from a weak starting point. And when you step back and look at the overall trend, it's still very clearly negative. Now, let's look at why this is happening. Because this is not just short-term volatility.

[00:03:59]This is structural. Firstly, Russia is still selling its oil at a discount.

[00:04:05]Even now, Russian crude is priced below global benchmarks. The gap has narrowed recently, but it hasn't disappeared. And over time, that discount directly reduces total revenues. Secondly, Russia's customer base has fundamentally changed. Before the war in Ukraine started, Europe was its key market. Now, Russia is heavily reliant on India and China. And those buyers know that they have leverage and they negotiate harder, push prices down and control more of the supply chain. And also they're refusing to pay in rubles. Thirdly, there's ongoing disruption and constraints.

[00:04:41]Attacks on infrastructure from Ukraine, logistical challenges and production limitations. All of these factors restrict how much oil Russia can export.

[00:04:51]So even when global prices rise, Russia can't benefit fully. Now, let's zoom out even further because this isn't just about 2026 versus 2025.

[00:05:03]Before the war in Ukraine started, Russia's oil and gas revenues were significantly higher, much more stable, and far more predictable. They had full access to global markets, minimal discounts, and efficient logistics.

[00:05:16]Today, that system has been fundamentally weakened. And what we're seeing in the current data is the consequence of that shift. Even when conditions are relatively favorable, as they are now, Russia is still earning less than it did a year ago and far less than it was earning before the war in Ukraine started. In other words, over the past four years, Russia's energy revenues have been significantly eroded.

[00:05:42]Now, why does this matter? Because oil and gas revenues are absolutely critical to Russia's finances. They typically account for around a third of total government income. So when those revenues fall the entire budget comes under pressure and that pressure is already very visible. Russia has posted a massive budget deficit in 2026. In the first quarter alone that deficit was 4.6 trillion rubles. That is an extraordinary number and it highlights the core issue. Russia is spending far more than it's earning mostly because of the war in Ukraine. And that gap is being filled by borrowing, drawing down on its reserves, the national wealth fund, and stretching the financial system, which is not sustainable indefinitely. So when you put all of this together, the picture becomes much clearer. Yes, May in itself was stronger. Yes, oil prices are currently high, providing a short-term boost, and temporary sanctioned relief has allowed Russian oil to reach the markets. But none of that changes the underlying reality because the key point here is not what happened in one month. It's the trend. And that trend is very clear.

[00:06:55]Russia's oil and gas revenues are still significantly lower than they were in 2025 and dramatically lower than they were before the war in Ukraine started.

[00:07:05]Over the past four years, Russia's energy income, the backbone of its economy, has been systematically weakened. And what we're seeing now is not a recovery. It's a temporary improvement within a much weaker system because it's also important to understand that some of the recent support is totally temporary. The easing of sanctions, including the US waiver allowing Russian oil to be delivered, is not permanent. Those measures were introduced not to benefit Russia, but to benefit the global supply chain for oil.

[00:07:36]And once those conditions change, that pressure will come straight back. So as soon as there is a form of resolution to the war in Iran, you would expect the sanctions to be fully imposed, enforcement to tighten again, and Russia's ability to export oil to become highly restricted. Which means the second half of 2026 is likely to look very different from Russia's perspective. And all of this feeds into the biggest issue of all, Russia's finances. Because right now, Russia is hemorrhaging cash. spending remains extremely high, revenues are underperforming, and the gap continues to widen. So, the conclusion from this latest data is not that Russia is recovering, it's that Russia is being given temporary relief within long-term decline. And that creates a very clear risk. Because if revenues are already under pressure in a relatively supportive environment, what happens when that support disappears? That's when a slowdown doesn't just remain a slowdown, it becomes a much more serious economic problem. So, I'll keep you posted on any further news and developments as and when I hear about them. But hopefully, you found this video useful, informative, and most importantly, thoughtprovoking. If you've liked what I've said, or maybe you didn't like it, you thought it was interesting, then please give me a thumbs up. Please subscribe to the channel if you haven't done so already.

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