Russia’s oil sector is facing a wave of bankruptcies as tightened U.S. sanctions drive prices for Russian crude down to $40 a barrel and below, triggering bankruptcies among producers in key regions.
State-owned lender VTB plans to file a bankruptcy petition against First Oil, an oil group controlled by former Sibur shareholder Yakov Goldovsky, The Moscow Times reports. First Oil operates in the Khanty-Mansi Autonomous Okrug, Russia’s primary oil-producing province. The company has amassed roughly 6 billion rubles in debt. Its portfolio includes fields with total reserves of 14 million metric tons, and output of about 500,000 metric tons a year. New U.S. sanctions have forced Russian producers to sell at discounts of up to $30 per barrel—pressure that pushed First Oil over the edge, swelling debts and straining its ability to service them.
“The oil-producing sector is sliding into crisis, and the latest sanctions will accelerate this process,” said Craig Kennedy, a former Bank of America vice president who is now an expert at Harvard University’s Davis Center for Russian and Eurasian Studies.
At around $40 a barrel, roughly half of Russia’s fields are unprofitable. Even with steep discounts, Russian companies are struggling to find buyers. Beyond China and, to a lesser extent, India, few are willing to purchase sanctioned crude.
Bankruptcy proceedings began in late 2025 against NK Yangpur, which represents Belorusneft and operates in the Yamal-Nenets Autonomous Okrug. Earlier, following lawsuits by the tax service, Astrakhan Oil Company and NK Gorny were declared bankrupt, and in January Moscow Credit Bank sought about 7 billion rubles from the owners of one of the bankrupt firms.
Nearly half of Russia’s oil and gas producers are unprofitable, according to Rosstat. Banks have been forced to restructure 2.7 trillion rubles in industry loans. Falling oil export revenues and a high key interest rate have formed an “explosive cocktail” for producers.
Hungary continues to import Russian oil despite available alternative routes and the EU’s drive to phase out Russian energy. At the same time, savings from cheaper crude are not reflected in consumer prices. The gains from importing discounted Russian fuel are not being passed on to end users and are concentrated in revenues linked to Prime Minister Viktor Orban.
On the night of December 3 an explosion hit Russia’s Druzhba oil pipeline. Ukraine’s Defense Intelligence (GUR) carried out the drone attack. The incident occurred on the Taganrog–Lipetsk branch.
