This article examines the ongoing decline of the Russian economy, focusing on two major oil producers – Rosneft and Lukoil. On October 22, 2025, the US Department of the Treasury announced sweeping sanctions against both companies and numerous subsidiaries. All their assets in the US were frozen, and any companies in which Rosneft or Lukoil hold 50% or more ownership also fell under the restrictions. The move impacted global markets immediately, with company shares down up to 7% in two days.
Rosneft and Lukoil together account for about half of Russia’s daily oil exports exceeding four million barrels. The new sanctions are already reducing Russian oil flows in Asian markets. For example, India is cutting imports nearly to zero, and the country’s largest private oil company is reconsidering long-term contracts. China faces less direct impact but is also exposed to potential risks.
Even prior to the new restrictions, Rosneft and Lukoil faced financial difficulties: their net profit in the first half of 2025 dropped by two to three times, revenue fell by 16–18%, and costs grew due to inflation and higher taxes. The newly imposed sanctions have worsened the outlook – combined, losses now exceed $5 billion, with major shareholders losing billions in valuation.
This has a significant effect on Russia’s national budget: oil revenues fell by 20% in the first nine months of 2025, and the budget deficit tripled. The so-called “shadow tanker fleet” has been used to bypass restrictions, but new international measures further limit this channel.
The sanctions are intended to cut off Russian exports to Asia, now the country’s key earnings source since 2022. For the first time, the restrictions target primary producers directly, complicating efforts to find new export markets. As a result, profits drop, exports shrink, oil is discounted more heavily, and state revenues decline. Major buyers, particularly India, are already prepared to abandon Russian contracts in favor of more reliable suppliers.
The global oil market remains volatile: prices fluctuate, and OPEC producers are seeking to increase sales. The overall trend points to a deepening crisis in Russia’s energy sector and a diminishing role on the world market. Further developments will be closely followed.
