Russia economy meltdown as Moscow ‘to be hit by $100bn deficit’ and oil shortage | World | News
Large cracks are beginning to show in Russia’s wartime economy, as a highly effective Ukrainian campaign of long-range air strikes targets the oil and gas industry that fuels Vladimir Putin’s war machine. Since August 2025, Ukraine has launched a large-scale air offensive against oil refineries, gas processing plants, fuel depots, pipelines, logistics hubs and export terminals across the Russian Federation. This has resulted in a sharp drop in Russian energy export revenues and a spike in fuel prices for domestic consumers.
Fuel shortages have also been reported in regions across the country, with car owners forced to queue for hours in a scramble for limited supplies. Now, other world leaders are beginning to forecast economic pain for Russia. Ukrainian President Volodymyr Zelensky has predicted that the Kremlin will face an unprecedented budget deficit of around $100 billion (£74.8 billion) in 2026. Meanwhile, US President Donald Trump has stated that the Russian economy is “going to collapse” unless Mr Putin ends his invasion of Ukraine.
In a recent assessment, the Paris-based International Energy Agency (IEA) stated that the impact from Ukrainian drone strikes is expected to suppress refinery processing rates for Russia’s economically crucial oil industry until at least mid-2026.
Ukrainian strikes are also continuing to gain pace, with Kyiv developing a new generation of domestically produced missiles that should enable a further escalation in the bombing campaign.
Since the start of the full-scale invasion of Ukraine in February 2022, Russia has faced several major budgetary strains. In 2022, the Kremlin’s urgent need to cover rising military expenditures forced it to resort to windfall taxes on the energy and banking sectors.
Then in 2023 and 2024, mobilisation and additional recruitment were financed mainly through municipal and regional budgets, along with minor tax hikes.
Elsewhere, Russia‘s coal sector – a cornerstone of its energy exports – is plunging into what officials have described as its worst crisis in three decades. Deputy Energy Minister Dmitry Islamov delivered a stark assessment at the Russian Energy Week forum on Thursday, warning that the industry’s consolidated losses reached 225 billion rubles (£2.1 billion) in the first seven months of 2025 – twice the total for all of 2024.
Last month, it was also claimed that Russia has lost some 486,000 businesses since 2022, leaving the country with 3.17 million business enterprises operating across the country as of September 1, 2025. This is the lowest level since 2010, according to Ukraine’s foreign intelligence service (SZRU).
