One of the Russian oil companies has already shut down about 400 wells due to the effects of the war and sanctions. Ukrainian intelligence has released new data on the economic losses of the aggressor country, including a reduction in oil refining and a banking crisis.
Hundreds of abandoned wells: what is happening in the Russian oil industry
According to the president Vladimir Zelensky, As a result, one of Russia's oil companies - and not the largest - has already been forced to shut down about 400 wells. In the Russian context, these are critical losses, as restarting wells is a complex and expensive process compared to other oil-producing countries. Ukraine's long-range sanctions are already having a significant impact on the Russian oil and gas industry.
Budget deficit and banking crisis
The Foreign Intelligence Service has received new documents assessing Russia's losses. According to Zelenskyy, Russian oil refining decreased by at least 10% in just a few months this year. This confirms the effectiveness of Ukrainian sanctions and points to the aggressor's serious economic problems.
Another alarming signal for the Russian economy is the banking crisis. It is estimated that 11 financial institutions are preparing for complete liquidation, and another 8 banks have accumulated critical problems that cannot be resolved without external assistance. This trend demonstrates the vulnerability of the Russian financial system in the face of sanctions and war.
Budget deficit and attempts to circumvent sanctions
Deficit of the Russian federal budget has already reached almost $80 billion in the fifth month of the year. This is happening against the backdrop of bankruptcy of many regional budgets. In an attempt to compensate for the losses, the Russian authorities are trying to arrange grain exports from the temporarily occupied Crimea and are using other forms of economic exploitation of the peninsula, even involving US entities.
In addition, there are attempts to attract investment and technology from the democratic world to Russian Arctic oil and gas projects. The Ukrainian side says it knows how to counter this and will continue to put pressure on the aggressor's economy.
Why it matters
Declining oil production, the banking crisis and the growing budget deficit are indicative of deep structural problems in the Russian economy. The sanctions pressure not only makes it harder to finance the war, but also undermines the sustainability of key industries. Ukraine plans to further strengthen sanctions to limit the aggressor's resources and accelerate the end of the war.
