Russia’s Oil Price Crisis: Trade War Fallout and the Ukraine War Funding Dilemma

Introduction

The global oil market has plunged into turmoil following U.S. President Donald Trump’s aggressive tariff policies, with prices dropping 15% since April 2, 2025. For Russia, which derives 30% of its state budget from oil and gas revenues, this collapse threatens its ability to sustain military operations in Ukraine. With Urals crude falling to $50 per barrel—far below the Kremlin’s budgeted $70—Moscow faces a fiscal crisis that could force cuts to defense spending as early as summer 2025. This report analyzes the causes, immediate impacts, and long-term implications of the oil price slump on Russia’s war economy.