US President Donald Trump said he may impose new sanctions on Russia if Russian dictator Vladimir Putin does not agree to negotiations to end the war in Ukraine. On Trump's first day in office, he publicly expressed his views on Putin's invasion of Ukraine for the first time in weeks during a press conference in the Oval Office.

"I think Zelensky wants a peace deal, but I don't know if Putin wants one. I think Russia is going to have real problems. I think Putin is destroying Russia," the American leader said, according to Time.

How sanctions affect Russians, Ukrainian Energy found out.

President Trump has so far only confirmed his readiness for new sanctions against Russia. Former US President Joe Biden did not stay away before his departure, because it was his administration that finally introduced additional sanctions against the Russian "shadow fleet" before leaving and may deprive the Russian budget of every fifth ruble of oil and gas revenues in 2025. Due to the sanctions that hit Surgutneftegaz and Gazprom Neft, as well as more than 180 tankers of the "shadow fleet", the Russian economy may lose from 10% to 20% of foreign exchange earnings from oil sales, or $ 10-20 billion, predicts Janis Kluge, a researcher at the German Institute for International Security. According to his assessment, the negative effect on budget revenues will amount to up to 1% of GDP. In monetary terms, this is about 2 trillion rubles, or 18% of the oil and gas fees that the Ministry of Finance planned for the current year (10.9 trillion rubles) and tankers. The restrictions include two key oil refineries for Russia (Omsk and Moskovsky), the operator of Rosneft's flagship project Vostok Oil (Vankor Oil), structures of the Baltic LNG project, two Gazprom LNG plants in the Baltic, 30 oil service companies and 6 top managers of the Russian oil and gas industry.

The number of vessels of the "shadow fleet" under Western restrictions has exceeded 270. According to S&P Global, the "blacklists" include tankers that carried half of Russia's seaborne oil exports, or 1.5 million barrels per day — about 1 million to China and about 500 thousand to India.

The new measures "will reduce Russia's revenues both in the budget and in terms of the trade balance," Kluge is sure.

Last year, according to the Russian Ministry of Finance, the Russian treasury collected 11.13 trillion rubles in taxes from oil and gas companies. Compared to 2023, their volume increased by 26%, but it did not reach the plan: initially 11.5 trillion rubles were laid down in the budget, then the bar was lowered to 11.3 trillion, but it was not possible to maintain it either. Total budget revenues increased by 26% (36.71 trillion rubles), and expenditures increased by 24%, to 40.2 trillion, exceeding the initial projection of 3.5 trillion rubles, or almost 10%. As a result, for the third year in a row, the “treasury” ended the year with a deficit, the size of which exceeded the initial plan by more than twice – 3.3 trillion rubles against 1.6 trillion. In 2025, budget expenditures should increase to 41.47 trillion rubles, of which 41% will be spent on the army, police and special services. At the same time, the “hole” in the treasury, according to the plan of the Ministry of Finance, should be reduced to 1.17 trillion. or 0.5% of GDP due to an increase in taxes on businesses and citizens.

According to internal calculations of Sberbank of the Russian Federation, which it shares with wealthy clients, real inflation in 2024 was 43%, Russian media report. According to estimates of Russian analysts, Russia may lose almost 30% of seaborne oil exports due to new US sanctions.

A new round of tightening US sanctions, which have hit Surgutnaftogaz, Gazprom Neft, and over 180 tankers in the Kremlin’s shadow fleet, threatens the sale of up to 800,000 barrels of oil abroad per day.

This is the assessment made by Alfa-Bank analysts in a review. As a result, Russian oil companies could lose 27.5% of their seaborne oil exports, which amounted to 2.9 million barrels per day as of early January. Total Russian oil exports, including pipeline deliveries to Hungary, Slovakia, and China, are higher: in December they amounted to 5 million barrels per day, according to the International Energy Agency.

Total export losses could thus amount to over 15%, Alfa-Bank estimates. After the imposition of sanctions, which became one of the strongest blows to the Russian oil industry since the beginning of the war, 65 tankers with Russian oil were forced to stop at sea, including off the coast of China, Russia and in the Middle East, Reuters reports, citing ship tracking data.

Five of the vessels that fell under the restrictions are standing near Singapore, another seven are drifting on the approaches to Chinese ports.

India and China, which have become major buyers of Russian barrels since the European embargo, are already looking for alternatives to Russian oil in the Middle East, Africa and Latin America, traders working in Asia said. According to them, refineries in the two countries, which together buy more than 80% of all oil exports from Russia, have already purchased batches in the UAE, Angola, Oman and Brazil, and are also in talks with Canadian suppliers.

India expects Russia to increase discounts on its oil to meet the G7 price ceiling of $60 per barrel, a senior official in New Delhi told Reuters. According to him, Indian ports will continue to accept Russian cargoes ordered before January 10, the date of the imposition of sanctions, but further supplies are still in doubt.

According to Bloomberg, in 2024 Russia spent almost a quarter of its National Welfare Fund reserves to support the war-torn economy and finance its invasion of Ukraine.

The National Welfare Fund was virtually unchanged in 2024 at about 12 trillion rubles ($117 billion). However, its liquid cash and investment holdings fell by 24% to 3.8 trillion rubles as of January 1 compared to the beginning of last year.

The fund has shrunk by 57% compared to the 8.9 trillion rubles available at the beginning of 2022, before President Vladimir Putin ordered a full-scale invasion of Ukraine in February of that year.

The Fund was built up from oil and gas revenues between 2010 and 2022.

Meanwhile, President-elect Donald Trump’s advisers are developing a sweeping sanctions strategy designed to help broker a diplomatic deal between Russia and Ukraine while ratcheting up pressure on Iran and Venezuela.

The Trump team is considering two main approaches, people familiar with the matter told Bloomberg.

One would ease sanctions on Russian oil producers that have been hit by them if that would help broker a peace deal — and if the administration sees a resolution to the conflict as imminent. The other would tighten sanctions to increase pressure on Moscow.

A more aggressive policy toward Russia could include more aggressive enforcement of secondary sanctions on oil trade, including on European shipping companies and Asian buyers, including major companies in China and India. Another possible approach is to more decisively oppose tankers transporting Russian oil through the Danish and Turkish straits.

At the same time, Russia’s real war spending is twice as much as the country’s officially declared defense budget. Russian analysts note that in order to cover the costs of the war, the Kremlin was forced to create a shadow system of financing the military-industrial complex (MIC). Back in 2022, Putin signed amendments on preferential financing of defense enterprises. As a result, corporate borrowing increased by 71% and amounted to volumes exceeding the total revenues from oil and gas and defense budget expenditures for 2022-2024. Up to $250 billion of this amount went to financing war-related and often uncreditworthy enterprises.

Through a surge in loans, the Kremlin managed to create a deceptive impression that the authorities were coping with the defense budget. However, it is this parallel scheme that has become the main factor in inflation and rising credit rates since the second half of 2024.

The government will probably soon have to take on obligations to save indebted enterprises, which can "eat up" up to half of the entire budget. After that, the Kremlin will not be able to finance the rearmament of the army unless the West eases sanctions.

According to analysts, Russia, like the USSR, is hiding the real state of affairs with the financing of the military-industrial complex in order to look better at future negotiations, ignoring the threat of a future credit crisis in the country.

As we can see, the myth of Putin's "invincible" Russia is currently actively spread only by Kremlin propaganda for its domestic audience and part of the pro-Russian Western establishment. So very soon a situation is possible when "the refrigerator will defeat the TV" and the Russian authorities will have to choose how to calm a society pumped up with propaganda.

Olena Marchenko, specially for "Ukrainian Energy"

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