Russia is still exporting plenty of oil — but earning far less to fund its war on Ukraine

• Russia's oil exports remain steady, but energy revenues have dropped sharply this year.
• US sanctions on major Russian oil firms has forced Moscow to reroute shipments via smaller producers.
• Falling oil revenues strain Russia's funding for its war in Ukraine.

Russia's oil companies are still shipping nearly the same amount of oil after the US Treasury cracked down on its biggest producers recently — but the country's energy profits are falling fast, a Goldman Sachs analysis shows.

In late October, the US Treasury announced sanctions on Lukoil and Rosneft, Russia's biggest oil producers. The changes sent seaborne shipments from these companies down 42%, to about 1.7 million barrels a day.

However, Russia's total oil exports slipped by just 100,000 barrels per day after the sanctions came into effect. This means that Russia rapidly rerouted shipments through smaller, non-sanctioned producers.

"Russian oil trading networks are reorganizing quickly while Russia oil exports revenues dropped," analysts from Goldman wrote in a note published on Tuesday.

Even so, the steady flow of barrels masks a far deeper financial squeeze.

Russia's oil export revenues, measured in rubles, have plunged 50% this year, tumbling from the equivalent of 7.6% of GDP to just 3.7%, according to Goldman's analysis.

The bank's report landed just as the Russian Finance Ministry disclosed that oil and gas tax revenues fell 34% from a year ago, underscoring the fiscal strain.

The revenue collapse stems from a combination of a stronger ruble and sagging Brent prices, widening discounts on Russian crude as buyers demand steeper price cuts to offset the risk of sanctions.

The divergence between stable exports and collapsing revenue has major implications for Moscow's ability to finance its war in Ukraine.

Oil and gas revenues have historically accounted for more than a third of Russia's federal budget, and energy remains one of the country's most significant sources of funding.

But even as Russia boosts weapons production and ramps up defense spending, the money flowing in to support that buildup is shrinking.

The timing is particularly sensitive. Ukraine has intensified its drone campaign against Russia's energy infrastructure, a trend Goldman highlights as a growing geopolitical risk.

Despite those attacks, Brent prices have barely moved, suggesting markets remain unconvinced that Russian supply is in immediate danger — a dynamic that keeps global prices low and Russia's revenues even lower.

An end to the war in Ukraine appears elusive nearly four years after Russia's full-scale invasion, despite renewed diplomatic attempts.

On Wednesday, the Kremlin said President Vladimir Putin and Donald Trump's top envoys did not reach a compromise on a possible peace deal after a five-hour meeting.