By Nina Bachkatov, with Romain Constantin
After more than four years of death and destruction, the initial sense of urgency has given way to a degree of normalisation, with the war in Ukraine increasingly reduced to daily tallies of losses on both sides. International attention has shifted — to Lebanon, the Strait of Hormuz, and economic tensions in the Asia-Pacific that could affect western economies. At the same time, EU institutions and national governments are struggling to support businesses and households from already stretched budgets.
For President Volodymyr Zelenskyy, this marks a renewed form of the feared “Ukraine fatigue”, partly alleviated by the approval of a €90bn EU loan — notably financing rather than aid. The funds will help sustain Ukraine’s war effort and Zelenskyy’s leadership. In return, Kyiv has agreed to repair damage to the Druzhba pipeline, which carries Russian oil to Hungary, Slovakia and the Czech Republic.
The decision by the US administration on April 17 to renew, for another month, a waiver on Russian oil exports has further fuelled Zelenskyy’s frustration. He warned that every dollar Russia earns from oil is “money for the war”, converted into new strikes against Ukraine. The waiver protects purchasing countries from US penalties at a time of tightening global supply and elevated prices. According to Kirill Dmitriev, the special envoy of Vladimir Putin, it could affect more than 100m barrels of oil.
An unexpected windfall
The development is a clear boon for the Kremlin. The waiver, combined with a rise in its benchmark crude prices, is set to boost federal revenues. According to Reuters, income from the mineral extraction tax could double to $9bn, helping offset earlier shortfalls in oil and gas revenues in 2026.
Oil prices had previously remained below the $59-per-barrel level underpinning the federal budget. Reaching that threshold is critical: oil and gas still account for about 22 per cent of budget revenues — Rbs8.9tn out of Rbs40.3tn ($537bn). By comparison, the share stood at roughly 50 per cent in 2014, prompting the late US senator John McCain to describe Russia as “a gas station masquerading as a country”.
Yet the broader economic picture remains fragile. On April 15, meeting senior officials, President Vladimir Putin acknowledged weak performance in the first two months of the year, with GDP contracting by 1.8 per cent year on year. Notably, he made no reference to rising energy revenues, instead urging ministers to propose measures to revive growth.
The slowdown reflects not only earlier price weakness but also a broader deceleration following rapid expansion in 2023 and 2024, when GDP grew by 3.6 per cent and 4.1 per cent respectively. Growth slowed to about 1 per cent in 2025, and the outlook for 2026 is more subdued. Investment has weakened, private consumption has declined, and state arrears to companies have accumulated. So far, higher energy prices have yet to translate into wider economic stimulus, though they may offer temporary relief.
Economic warfare
The international context — with Donald Trump prioritising global markets and ready to sideline the Ukraine conflict — has strengthened the influence of Zelenskyy’s new chief of the presidential administration Kyrylo Budanov and defence minister Mykhailo Fedorov. Both favour a more aggressive strategy targeting Russian assets.
Their approach reflects a belief that Ukraine must prevail not only militarily but also economically — by disrupting the infrastructure underpinning Russia’s energy revenues, including ports, pipelines and refineries. A notable example came on the night of April 16–17, when Ukrainian forces struck facilities in Tuapse a day after the US waiver decision.
During a hastily arranged diplomatic tour, Zelenskyy sought to persuade allies that such a dual strategy could force Moscow to negotiate on Ukraine’s terms. That outcome remains uncertain. In the current environment, Kyiv must also weigh the risks of escalation — including strikes near Nato airspace, attacks on shipping, and potential disruption to global energy supplies.
Diplomatic drift
The current situation, while providing short-term relief to Russia’s finances, may also have unintended diplomatic consequences. Even within parts of the EU — albeit outside formal discussions — there are signs of interest in more “pragmatic” approaches, including the possible suspension of some sanctions.
More broadly, conflict in the Gulf and damage to regional energy infrastructure risk reinforcing perceptions in parts of the global south that western policy is inconsistent and selective. Kremlin spokesperson Dmitry Peskov has argued that the waiver underscores Russia’s continued importance in global oil markets, rendering the G7’s $60 price cap and the EU’s $47.60 cap increasingly ineffective.
Some western analysts have begun to reassess earlier assumptions about Russia’s resilience — economically, militarily and socially. The issue is less whether to support Ukraine than how best to do so without allowing policy to be driven by short-term sentiment.
Few anticipated that, five years into the conflict, Russian policymakers would still be focused on sustaining growth rather than averting a deep recession. The so-called “war economy” appears more complex than initially thought, combining elements of state control with decentralised adaptation, and closer co-operation between defence industries, private firms and research institutions.
Even in scenarios where Russia emerges weakened, it may retain significant global influence — not least through its natural resources and its capacity to disrupt.