Russian economy meltdown as energy revenues plummet £330bn in sanctions 'turmoil'

Putin is facing a growing economic crisis (Image: Getty)

Russia has lost £330 billion in energy revenues due to the imposition of Western sanctions. The Kremlin relies heavily on income generated from the sale of oil and gas to help fund its war in Ukraine.

Fossil fuel sales account for 30% of Russia's state income and help pay for the Kremlin's astronomical spending on defence, which this year will come to around £109 billion. However, Western sanctions have effectively closed off European markets for Russian oil and gas, forcing the Kremlin to become increasingly reliant on India and China.

Russian oil workers in Siberia (Image: Getty)

Putin has attempted to get around sanctions and an oil price cap by using a shadow fleet of tankers.

However, former President Joe Biden clamped down on the illicit fleet, with a new set of swingeing sanctions shortly before he left the White House in January.

The sanctions targeted 183 vessels - mainly tankers - as well as insurance companies, dozens of traders of Russian oil, and service providers.

A senior British military adviser noted the Russian economy was facing increasing turmoil as the war drags on into its fourth year.

Lieutenant Colonel Joby Rimmer told a meeting of the OSCE in Vienna last week: "As it continues to escalate the conflict, the economic toll on Russia’s own population is becoming increasingly severe.

"Interest rates in Russia have surged to 21%, reflecting deep financial instability; 40% of Russia’s federal government spending in 2025 has been committed to defence.

"For the first time in post-Soviet history, defence spending has exceeded social spending;

"Russia has depleted two-thirds of the liquid assets in its National Wealth Fund

"And due to international sanctions, Russia has lost an estimated $450 billion USD in energy revenues."

Income from oil and gas sales fell by an eye-watering 1.09 trillion roubles (£10 billion) in April.

This represents a fall of 12% year-on-year, and presents the Kremlin with an unwanted fiscal headache.

The Kremlin is preparing to raise gas prices for industry to offset losses at Gazprom, which has also seen exports plummet since Russia’s full-scale invasion of Ukraine in February 2022.