Russia’s federal budget oil and gas revenues fell to $4.9 billion in August 2026, the lowest level since January this year. According to Russia’s Ministry of Finance, revenues from the oil and gas sector declined by 16% compared with August 2025 and by as much as 55% compared with July 2026. In monetary terms, the month-on-month decline amounted to $10.79 billion.
Overall, Russia’s federal budget received $57.97 billion in oil and gas revenues between January and August 2026. This was 16.7% less than during the same period last year. Meanwhile, net budget revenues from the oil sector amounted to $3.77 billion in August, down 22% year-on-year.
The main reason for the decline in revenues was the fall in the price of Russia’s Urals crude oil. The level of Russia’s main oil taxes, which flow into the federal budget, depends largely on the price of Urals. Strikes on Russian oil refineries remain an additional risk to future budget revenues. The main financial impact of damage to refineries is likely to become more visible in the coming months.
At the same time, Russian experts point to the significant burden that the oil sector places on the federal budget. Between January and August 2026, payments to oil companies under the fuel damper mechanism reached $10.58 billion. The fuel damper is a mechanism through which the Russian government compensates oil companies for part of the losses they incur by supplying fuel to the domestic market at prices below potentially more profitable export levels.
In August, actual oil and gas revenues to the Russian budget were approximately $44 million below the baseline level envisaged under the country’s fiscal rule. This trend reduces the Russian budget’s ability to further increase support for the oil refining sector without an additional deterioration in its fiscal indicators.
Oil revenues are most likely to recover partially from their August low in the coming months, but are expected to remain below last year’s levels. This indicates that the deterioration in Russia’s budget situation is not a one-off development but is linked to declining fiscal returns from the oil sector.
Damage to Russian oil refineries is likely to intensify this effect in the coming months. The Kremlin will simultaneously lose part of the tax revenues generated by oil refining while being forced to increase spending to stabilise the domestic fuel market.
Under these conditions, even a possible recovery in the price of Urals crude would not guarantee that Russia’s oil and gas revenues return to 2025 levels. As a result, financing high levels of budget expenditure will increasingly depend on non-oil and gas revenues, domestic borrowing and the use of reserves.
