Russia’s oil and gas sector doomed to decline due to sanctions – intelligence

According to Ukrinform, this was reported by the Foreign Intelligence Service of Ukraine.

According to the intelligence, the updated baseline forecast of the Russian Ministry of Economic Development has turned out to be critically dependent on whether international sanctions remain in place or are lifted.

Agency analysts project an increase in the average price of Urals crude from $58 per barrel in 2025 to $65 in 2028, but this scenario is only possible if Russia exits international isolation.

Global oil demand is growing ever more slowly, the OPEC+ agreement is losing effectiveness, while excess capacity in the Middle East and rising production in South America are putting pressure on the market. As a result, Brent prices could fall to $60 per barrel in the coming years, collapsing Russia’s revenues as well.

In August 2025, Urals traded at just $56.1 per barrel, with a $12.1 discount to Brent. A return to a more favorable spread (–$1–2) is possible only if the European embargo is lifted and Russian companies are removed from the U.S. sanctions list. Without this, Russian oil is doomed to discounts.

The situation is no less difficult in the gas sector. The Russian government expects LNG exports to grow from 34.6 million tons in 2024 to 58.4 million tons in 2028. However, achieving such volumes is impossible even with the Arctic LNG 2 project — new projects are required, including key ones currently under U.S. sanctions.

There are also problems in oil refining. Even under optimistic forecasts, growth in petroleum product exports from 122.5 million tons in 2024 to 134 million tons in 2028 is possible only with access to Western equipment, the supply of which has been banned since 2022.

As reported by Ukrinform, Russian seaborne oil exports reached a 16-month high over the past four weeks, as the country’s refineries were forced to cut output due to Ukrainian drone strikes.

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