The oil industry of the Russian Federation, which has been one of the main sources of budget revenue for decades, is facing increasing difficulties. The economic pressure caused by the full-scale war, Western sanctions, and aging oil fields has led to a significant rise in oil production costs. Since the onset of hostilities, the average cost of oil production in Russia has exceeded $45 per barrel, raising doubts about the long-term economic sustainability of the industry.
This is reported by Finway
Depletion of Oil Fields and Technological Isolation
Analysts note that already 59% of oil reserves in Russia fall into the category of hard-to-extract, and this share could rise to 80% by 2030. This means that oil extraction will become even more challenging and expensive. It is estimated that by the end of the decade, oil production in the country could decline by at least 10%.
The situation is further complicated by the lack of access to modern Western technologies that are necessary for the effective development of complex fields. Even if sanctions are lifted, the structural problems of the industry will not disappear, as the resource base has already significantly deteriorated.
“Extracting oil is becoming harder and more expensive. Essentially, it is a long, slow farewell to Russian oil,” noted S&P Global expert Matthew Seigers.
Increase in Gas Exports to China Amid New Restrictions
Despite the challenges in the oil sector, Russia is increasing its gas exports to China. In July 2025, the volumes of pipeline and liquefied gas supplies to China reached 4.25 billion cubic meters, which is 11% more than in July of the previous year. This is a new record for Russian gas exporters, and their share in China’s import structure has reached 28%.
However, the Chinese government, responding to sanction pressures from the United States, has decided to restrict the access of shadow fleets to one of the country’s largest oil terminals – the port of Qingdao. The new restrictions will come into effect on November 1, which may complicate the logistics of Russian energy resources in the future.