Russia’s economy ‘stinks,’ Trump says, and lower oil prices will stop its war machine

The rift between Moscow and Washington looks set to deepen after U.S. President Donald Trump said Tuesday that Russia’s economy “stinks” and that lower oil prices will hammer President Vladimir Putin’s oil-funded war machine.

“Putin will stop killing people if you get energy down another $10 a barrel. He’s going to have no choice because his economy stinks,” the president told CNBC’s “Squawk Box.”

The comments come after relations between Moscow and Washington, which remained cordial at the start of Trump’s second term in office despite the ongoing war, soured in recent weeks.

Trump has appeared to lose patience with Putin given Russia’s apparent reluctance to pursue a ceasefire or peace deal with Ukraine. Last Monday, the president said he was cutting from 50 days to less than two weeks his deadline for Putin to reach a peace deal with Ukraine or face big “secondary tariffs” on Moscow’s trade partners.

That prompted former Russian President and high-ranking Russian official Dmitry Medvedev to respond on social media that each new ultimatum that Trump makes about Russia to force an end to its war on Ukraine “is a threat and a step towards war.”

“Not between Russia and Ukraine, but with his own country,” Medvedev wrote on X. Trump said on Friday said that he had ordered two nuclear submarines “to be positioned in the appropriate regions” in response to Medvedev’s comments.

Russia, one of the world’s top oil exporters, has used revenues from oil exports to largely fund its war machine in Ukraine, which it invaded in 2022. Ukraine’s Western partners have used sanctions and restrictions to try to stifle those revenues, but countries like India and China have continued to buy discounted Russian crude.

This has infuriated Trump and he has, in the last few days, threatened India with steep tariffs if it does not stop buying Russian oil. The president threatened a 25% duty on Indian exports, as well as an unspecified “penalty” last week, accusing New Delhi of buying discounted Russian oil and “selling it on the Open Market for big profits.”

On Tuesday, Trump told CNBC that the tariff threshold could be hiked above 25% in the next 24 hours.

“India has not been a good trading partner … so we settled on 25%, but I think I’m going to raise that very substantially over the next 24 hours, because they’re buying Russian oil, they’re fueling the war machine, and if they’re going to do that, I’m not going to be happy,” Trump said.

Russia earlier on Tuesday weighed into the spat, with the Kremlin saying India was free to choose its own trading partners and that Trump’s tariff threats were “attempts to force countries to stop trade relations with Russia.”

“We do not consider such statements to be legitimate,” Kremlin Press Secretary Dmitry Peskov continued, speaking to reporters Tuesday.

“We believe that sovereign countries should have, and have the right to choose their own trade partners, partners in trade and economic cooperation. And to choose those trade and economic cooperation regimes that are in the interests of a particular country.”

Oil prices declined to around the mid-$65 a barrel mark on Tuesday as traders assessed the announcement by OPEC and its oil-producing allies on Sunday that they would hike output, amid potential weaker global demand.

After Trump’s comments on Tuesday, Brent crude futures were down 83 cents, or 1.2%, to $67.92 a barrel, while U.S. West Texas Intermediate crude slipped 87 cents to $65.41.

Meanwhile, dark clouds certainly appear to be gathering on the horizon when it comes to Russia’s war-focused economy. It has labored under the weight of international sanctions as well as homegrown pressures, also largely resulting from war, such as rampant inflation and high food and production costs that even Putin described as “alarming.” Russia’s Economic Development Ministry also predicts that economic growth will slow from 4.3% in 2024 to 2.5% this year.