In this interview, experts analyze the impact of Western sanctions on the Russian economy, focusing particularly on the prospect of lowering the oil price cap to $47 a barrel. Economists say this could pose a serious challenge for the Russian budget: with production costs around $45-50 per barrel, state revenues will sharply decline.
In recent months, revenues from oil have already plummeted, and the Russian budget is running at a deficit, with income figures up to three times lower than projected. Although Russia can partially bypass sanctions through a “shadow fleet” and alternative routes, tougher US sanctions—especially if mechanisms for enforcement are supported by China and India—could make circumvention more difficult.
New US legislative initiatives propose granting the president the unilateral authority to impose hefty tariffs on countries buying Russian oil such as China and India. However, there is no certainty these measures will be enforced immediately, and unpredictability—particularly from Trump—adds intrigue. Trump may seek to avoid confrontation or suddenly increase pressure for political gain.
Inside Russia, authorities are increasingly relying on repurposing domestic resources, including seizing private assets and using citizens’ savings to shore up the budget. Experts foresee growing nationalization and even potential cuts to social payments like pensions, a move that, while painful for citizens, lets the Kremlin keep funding the war.
Despite major structural problems, Russia remains a large economy with reserves. However, sustained sanctions, economic isolation, and reduced social guarantees could eat away at the foundations of the regime. Much will depend on how citizens and elites respond to expanding restrictions and repressive measures, which could shape Russia’s future trajectory.
