Russian Ruble Drops as EU Announces New Sanctions on Energy Sector and Banks

Report by “Safarti Tarjuman” International News Desk

MOSCOW — The Russian ruble fell sharply on Wednesday following the European Union’s announcement of new sanctions targeting Russian banks and energy exports, sparking investor concern and currency market volatility.

The dollar surged nearly 3% on the Moscow Exchange within hours, jumping from 78.2 rubles in early trading to 80.49 by 1:45 p.m. local time. The euro climbed above 91 rubles, while the Chinese yuan increased nearly 2% to 11.04 rubles.
Analysts say the ruble’s sudden decline may signal the beginning of a longer-term weakening trend. The downturn coincided with the European Commission’s proposal for a new package of sanctions.
Key proposals include:

• Blacklisting tankers involved in violating oil sanctions
• Banning transactions with Nord Stream gas pipelines
• Reducing the price cap on Russian crude from $60 to $45 per barrel

Under the updated price cap, oil sold above the threshold would be excluded from Western insurance and shipping services. Experts say this move, if backed by the U.S. and G7, could significantly disrupt Russia’s oil revenues.

The Moscow-based Institute for Energy and Finance warned that further sanctions could shrink seaborne oil exports and reduce federal revenue.
“Greek shipping firms, key players in transporting Russian crude, may exit the market entirely,” the think tank stated.

Reuters reported that the ruble is also under seasonal pressure as exporters reduce foreign currency conversion ahead of Russia Day weekend. Simultaneously, demand for foreign exchange appears to have increased.

Additionally, a fall in oil revenue is straining the Russian economy. According to the Economic Development Ministry, the average price of Urals crude declined to $52 per barrel in May, down from $66 in January — its lowest level in over two years.

Experts predict further ruble depreciation in the months ahead:

• Yevgeny Kogan, a Moscow-based investment banker, anticipates continued weakness in June and July.
• Sofya Donets, chief economist at T-Investments, said pressures could push the exchange rate beyond 90 rubles to the dollar by August.
• The Center for Macroeconomic Analysis and Short-Term Forecasting, a government-linked institute, warned of a potential “overshoot” in the opposite direction, reversing the ruble’s earlier 2025 gains.

“The more overvalued the ruble is now,” the center noted, “the more exposed it is to a sharp correction.”

Despite being one of the best-performing global currencies in early 2025 — gaining 40% since January — Wednesday’s decline has raised doubts about the sustainability of the ruble’s rally.

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