Russia’s oil producers reduced the pace of drilling in 2025 to the lowest level in three years, dimming the outlook for output growth this year as Western sanctions and a strong ruble undercut revenue.
Rigs drilled about 29,140 kilometers of production wells in the country last year, down 3.4 percent from 2024, according to industry data seen by Bloomberg News. After reaching record rates in the first months of 2025, activity started to slow in June and slumped about 16 percent in December from a year earlier, the data show.
The slowdown comes as Russian producers are under pressure from lower global oil prices, deeper discounts on their barrels due to tighter Western sanctions and a stronger ruble that made exports less profitable. Meanwhile, the Organization of the Petroleum Exporting Countries and its allies are reviewing how much its members are capable of producing years ahead, in an effort to align output quotas more closely with members’ actual abilities.
Production in Russia, a de-facto leader of OPEC+ along with Saudi Arabia, has already fallen for two consecutive months amid export constraints, and lower drilling could add further pressure as the alliance weighs its next steps in supply policy.
“Russian production is quite similar to the US shale, with output growth and decline looking like an echo of drilling amount several months prior,” said Sergey Vakulenko, who spent a decade as an executive at a Russian oil producer and is now a scholar at the Carnegie Endowment for International Peace.Russia’s Energy Ministry didn’t immediately respond to Bloomberg request for a comment.A decline in drilling rates in the second half of the year is “a rational reaction of companies to a collapse in profitability,” said Gennadii Masakov, former director of the research and insights center at Yakov & Partners and currently an independent energy expert. “Companies have switched to cash saving mode.”
The price of Urals, Russia’s main oil-export blend, shrank to $39.18 a barrel in December for tax purposes, a 42 percent drop from January. After the US blacklisted top producers Rosneft PJSC and Lukoil PJSC, the discount on Urals to the Brent benchmark widened to about $27 a barrel at the point of export in December – more than double from the start of 2025 – as buyers sought a bigger financial incentives to continue purchases.
At the same time, the ruble appreciated by almost a quarter against the US dollar as Russia’s key interest rate remained near a record high.
“All these effects reduce the ruble-based net present value of a prospective well, making the companies drill less,” Vakulenko said.