How fossil fuel exports pay for Russia’s trillion-dollar war in Ukraine

Before dawn on the morning of 7 February Russia launched a barrage of 64 drones and missiles at Ukrainian civilian targets. Twenty got through. Kyiv and five other settlements in regions from Kharkiv to Lviv were hit. Five people died.

So what? It wasn’t an unusual night. Most weeks in the two years since Russia invaded Ukraine it has launched salvos of long-range guided weapons at staggering cost – not just in human but also in financial terms. 

• The weapons used in the 7 February barrage alone cost an estimated $430 million.
• The seizure of Russian assets and sanctioning of Russian firms and individuals was meant to paralyse Putin’s economy. It didn’t happen.
• On the contrary, $430 million represents less than a day’s earnings from oil and gas exports for the Russian state.

Fossil fuel prices spiked so high in February 2022 that even when sold at steep discounts to countries willing to ignore Russia’s war crimes, its hydrocarbons have easily funded its arsenal.

Overall, Russia’s monthly export earnings have fallen by roughly 40 per cent since the invasion, dragged down by EU boycotts. But China, India and the rest of the world have kept Putin’s economy afloat. 

In the two years of the war, Europe’s biggest economies have turned away from Russia as their chief supplier of natural gas – but the EU has still spent four times as much on Russian energy as on military aid to Ukraine.

China, Hungary, Turkey and Brazil have sustained Russia’s war effort by buying more of its energy than before the invasion. So have Ireland and Switzerland, alone among European countries. 

But Hong Kong and India stand out as willing enablers of the Russian war economy. Their imports of Russian oil and gas have roughly quintupled since 2021.

By the numbers:

$150 billion – Russia’s total military budget for 2022 and 2023 combined 

$22.8 billion – total cost of all missile attacks on Ukraine from the start of the invasion until October 2023 

$599 billion – total payments to Russia for its fossil fuel, 2022-2023

$151 billion – cost of Ukrainian infrastructure damage, 2022-2023

$98 billion – military aid to Ukraine, 2022-2023

$34.5 billion – Ukraine’s military budget, 2022-23 

$1 trillion – estimated total cost of the war so far including military spending, infrastructure damage, lost GDP and financial capital destruction.

Moreover… Since the imposition of an EU oil embargo and price cap in December 2022, 36 per cent of Russian oil by volume has been shipped in a ghost fleet of tankers operating without internationally approved insurance. Despite the cap, the EU remains one of the top five importers of Russian oil and gas. 

Russian banks have meanwhile been handling takeovers of Western business assets offloaded during the war. Instead of suffering having been cut off from international payment systems, they have thrived.

Additional reporting by Conor O’Brien. Graphics by Bex Sander and Katie Riley.

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