Since the beginning of Russia’s full-scale war against Ukraine, the collective West introduced sanctions that were intended to deprive the aggressor country of the means to conduct military operations and, as a result, create conditions for a change in the ruling regime there.
However, after 29 months of war, hopes that only economic methods can influence the situation are becoming increasingly elusive
How much money is Russia losing due to Western sanctions?
It is important to note that the sanctions imposed by the European Union and the United States have already shown their effectiveness. According to the International Sanctions Group, the embargo and restrictions on the maximum price of oil have caused Russia losses amounting to $113 billion since the start of the full-scale war. However, Russia is trying to adapt to these restrictions, so further strengthening of economic sanctions is necessary.
Among the priority areas of sanctions are the EU policy against the Arctic 2 project and the refusal to purchase Russian liquefied gas. It is also important to continue to impose sanctions against shipping companies and individual vessels that are used to transport Russian oil, legally limiting their activities.
US sanctions imposed against third countries for trading with an aggressor country also painfully affect Russia’s ability to earn petrodollars.
In particular, Russia earned almost $100 billion from oil sales to China and India, but the funds were stuck in Indian banks due to payments in rupees. India also stopped buying Russian premium oil due to secondary US sanctions. Negotiations between Rosneft and Indian oil refineries have failed; instead, India is increasing its oil imports from Saudi Arabia.
Payments from China to Russian companies are also delayed due to banks' fears of secondary US sanctions.
According to Advisor to the Head of the Office of the President Vladislav Vlasyuk, the level of restrictions applied to Russia has no analogues in modern history, exceeding even those imposed against North Korea and Iran. However, attempts to expand the coalition of countries supporting sanctions are encountering difficulties, as some states, such as India and China, ignore these measures.
Vlasyuk notes that Russia, as one of the world's leading exporters of natural resources, is accustomed to constant financial growth, but sanctions have seriously complicated this trend. According to him, more than 30% of the Russian state budget is already spent on military needs, which is reminiscent of the situation in the Soviet Union in the late 80s.
A number of sectors of the Russian economy that previously relied on exports to the European Union, in particular aircraft manufacturing, woodworking and oil refining, were completely devastated due to sanctions. Vlasyuk notes that Gazprom’s unprofitability, which is observed for the first time in many years, is one of the most noticeable consequences of this policy. The company, which was once valued more than Apple or Microsoft, is now suffering huge losses.
According to the adviser's estimates, Russia's GDP growth at 2-3% is insufficient, given the global oil price environment. He wonders how much growth there would be without sanctions
A spokesman for the Office of the President emphasizes that sanctions have forced Russia to turn to other countries for help in circumventing restrictions by using alternative currencies for transactions. This indicates a significant loss of Russia’s position in the global economy and its investment attractiveness.
Vladislav Vlasyuk claims that despite restrictions and sanctions, Russia does not stop earning significant sums from oil sales, receiving between 10 and 17 billion dollars monthly. “In recent months, we have seen an increase in oil export revenues. If in February this figure was at the level of 10 billion, then in March and April it reached 17 billion. This indicates that Russia was able to adapt to oil sanctions,” notes Vlasyuk.
As for European businesses on the Russian market, their activities bring significant tax revenues to the Russian budget. “European banks paid 800 million euros in taxes in Russia over the past year, which is double the figures for previous years,” adds Vlasyuk.
He also notes that Russia's total economic losses from sanctions are estimated at at least $170 billion. However, as long as Russia is able to earn money from oil, it can afford these losses. “On the one hand, we see that economic pressure on Russia has concrete results. However, on the other hand, she continues to earn money,” concludes a representative of the President’s Office.
Forecasts regarding Russia's financial future in the context of existing sanctions and price restrictions indicate a reduction in oil revenues: from $163 billion in 2024 to $143 billion in 2025.
However, at the end of March, Russia's oil export revenues reached their highest level since the beginning of the year, reaching $1.9 billion per day. Oil exports also increased and amounted to 3.74 million barrels per day, of which approximately 50 thousand barrels are sent daily from Russian ports to an unspecified destination.
This raises questions about the effectiveness of sanctions and the need to strengthen them to ensure a more significant impact on the Russian economy. Sanctions against Russian oil have been criticized for their lack of effectiveness, but at the same time they leave room for further steps to restrict Russia economically.
How Russia manages to bypass Western sanctions and continue to make money from the sale of energy resources
The Institute of the Kyiv School of Economics, which conducted an in-depth analysis of Russian oil supplies, discovered an alarming trend: the vast majority of tankers shipping from Russian ports are significantly older - more than 15 years. This poses a threat to environmental safety, in particular in the coastal waters of the European Union. However, the sanctions did not affect all 235 vessels.
Most of them are able to transport oil bypassing price restrictions, which brings them an additional profit of at least $10 per barrel.
But it’s not just oil exports that fuel the Russian war machine—15% of the gas imported by the European Union is also supplied by Russia.
In 2023, 15.6 million tons of Russian liquefied gas were delivered to European ports. However, since April, European countries have the opportunity at the legislative level to limit the use of port infrastructure by Russian companies to carry out such deliveries.
According to Ukrainian journalist Vitaly Portnikov, Western countries do not have such an economic mechanism that can destroy the Russian economy to smithereens. The example of Iran and Russia clearly demonstrates that trade ties with the countries of the global South, primarily China and India, allow them to exist calmly even under strong Western sanctions. And this is a reality that politicians must reckon with.
Portnikov noted that back in 2014, there was a widespread opinion that the introduction of powerful sanctions by Western countries against Russia, which were also called “sanctions from hell,” could completely destroy the Russian economy. However, the journalist states that most of these sanctions have already been put into effect, but this has not had a significant effect, because if in the modern world an oil country like Russia continues to sell energy resources to China and India, this is enough to continue to keep the economy afloat.
