Russian oil producers are getting dangerously close to the edge of profitability. By the end of 2025, discounts on Urals crude nearly hit historic highs - $20–$30 per barrel below Brent. This is severely squeezing suppliers’ revenues, according to Reuters estimates.
In practice, Russia is selling oil cheaper than the market just to keep export volumes. But the cost of this strategy is becoming clearer, DKNews.kz reports.
Who is struggling the most
Some companies are barely breaking even, while others are already operating at a loss.
Those hit hardest are companies that:
- have high production costs
- operate remote or technically difficult fields
- pay the full mineral extraction tax (MET) without benefits
With weak global prices, the export netback drops - and margins simply collapse.
Tax breaks don’t help everyone
The system of tax relief in the sector is uneven.
Today:
- about half of producers benefit from reduced MET
- around 20% operate with a zero rate
For them, the situation is softer - they can still stay profitable even with deep discounts.
But the market is becoming fragmented: some manage to hold on, others are counting losses.
Route matters as much as price
Profitability also depends on where the barrels go.
Analysts note:
- shipments to Turkey often price higher
- exports to China are not always as profitable
- the ESPO blend sometimes trades at a premium, reducing logistics costs
Two barrels from the same country can earn completely different money - logistics and conditions decide everything.
The Finance Ministry braces for lower revenue
Russia’s Finance Ministry expects oil tax revenues to fall.
Key drivers include:
- sanctions pressure
- shifts in demand from major buyers
- weak global benchmarks
- the need to maintain deeper discounts
In such conditions, it becomes harder for the state to support the industry at previous levels, forcing companies to adapt.
What comes next
Experts warn that the strategy of “surviving on discounts” cannot last forever.
Russian producers now face three major risks:
- losing markets if they cut discounts
- losing profits if they keep them
- facing additional restrictions from sanctions and logistics
The real question isn’t how much a barrel costs, but how much actually stays in the pocket.
