The oil industry of the Russian Federation is experiencing a significant reduction in potential due to a combination of Western sanctions, depletion of old fields, and high costs associated with the war. These factors are having a substantial impact on the country’s economy, which has relied on oil exports for many years.
This is reported by Business • Media
Rising Costs and Production Challenges
Since the onset of the full-scale war, the average cost of oil production in Russia has exceeded $45 per barrel. This is due to the gradual depletion of easily accessible reserves, while the share of hard-to-extract resources is expected to increase from 59% currently to 80% by 2030. At the same time, the total volume of oil production may decline by at least 10% in the next five years.
Developing complex fields requires modern Western technologies, access to which Russia has lost due to sanctions. Even with a swift end to the war and possible lifting of sanctions, experts note that the problems in the oil sector will persist due to the fundamental deterioration of the resource base.
“Extracting oil is becoming harder and more expensive. Essentially, this is a long, slow farewell to Russian oil,” noted S&P Global expert Matthew Seigers.
Gas Export Situation to China
Despite difficulties in the oil sector, Russia has set a new record for gas exports to China. In July 2025, pipeline and liquefied natural gas supplies increased by 11% compared to the same period last year, reaching 4.25 billion cubic meters. This allowed Russian suppliers to account for 28% of China’s gas imports. The previous peak was recorded in January 2025 at 4.06 billion cubic meters.
At the same time, under the influence of U.S. sanctions, China has decided to restrict access for the shadow fleet to one of its largest oil hubs – the port of Qingdao. New requirements will take effect on November 1, 2025, and aim to complicate illegal oil supplies.