A simple explanation of Russia's war economy:
- Military spending in Russia's 2024 budget: $109 billion (30% of the budget)
- Oil and gas revenue for Russia's budget: $108 billion
- 83% of the revenue comes from oil exports, 17% from gas exports
It’s clear why sanctions on Russian energy resources are necessary: oil and gas revenues are essentially funding Russia’s war against Ukraine.
Why was it important to stop gas transit through Ukraine?
Annually, the export of 15 billion cubic meters of gas brought Russia $6.5 billion. Considering the tax burden on the industry at 75%, $4.88 billion would have gone into Russia's budget. This means that 4.5% of total oil and gas revenues came from gas exports through Ukraine. In other words, every 22nd bullet was financed by the revenue from this gas transit.
But this will no longer happen, as gas transit has finally been stopped.
Why is it now important to stop oil transit?
Last year, Russia could have earned $6 billion from oil sales to Europe through transit via Ukraine, with $4.5 billion going into Russia's budget.
This represents an additional 4.2% of Russia's total oil and gas revenues or military expenditures.
Roughly speaking, in 2024, oil and gas exports via Ukraine could have contributed 8.5% to Russia's budget and financed 8.5% of all military expenditures. Every 12th bullet for Russia.
That’s why Ukraine must urgently stop the transit of Russian oil to deprive Russia of $6 billion or reduce oil and gas revenue inflows to Russia’s budget by another 4%.
We must not only demand sanctions from our partners, but we must also take action to reduce Russia’s income.
