Russia is the most sanctioned nation, but it remains the world’s third largest crude oil producer, using energy of all types including crude oil and and natural gas, to finance its war in Ukraine. The latest action by U.S. President Donald Trump in the form of secondary tariffs may halt the flow of revenue streams to the country. Any country trading with Russia could be subjected to 100% U.S. import tariffs, thereby isolating Russia completely in the financial sense. Since the second quarter of 2021, Russian crude oil exports have been on the decline and over 30% of Russian government spending is financed with oil and gas.
Military spending has spiked to 6.3% of GDP, the highest since the height of the Cold War. Although growth had been 4.3% in 2024, now Russia’s own officials are cautioning that the economy is on the precipice of recession, with the IMF correctly foretelling a meager 0.8% growth model after revising their projections down including sanctions impacts thru 2025. While Russia attempts to insulate itself with a “shadow fleet” to evade sanctions, further restrictions on their exports could negatively curtail Russian revenues and their capacity to wage war. The aim of Trump and his cabinet is clear, and structured to strategically drain money from Russia’s war chest by identifying their trading partners and punish them, notwithstanding the risk of global economic destruction.
