In 2006, Russia’s real gross domestic product (GDP) grew by approximately 6.7 percent, surpassing average growth rates in all other G8 countries, marking the country’s seventh consecutive year of economic expansion. Russia’s economic growth over the past seven years has been driven primarily by energy exports, given the increase in Russian oil production and relatively high world oil prices during the period. Internally, Russia gets over half of its domestic energy needs from natural gas, up from around 49 percent in 1992. Since then, the share of energy use from coal and nuclear has stayed constant, while energy use from oil has decreased from 27 percent to around 19 percent.

Russia’s economy is heavily dependent on oil and natural gas exports, making it vulnerable to fluctuations in world oil prices. According to an International Monetary Fund (IMF) study , a $1 per barrel increase in Urals blend oil prices for a year is estimated to raise federal budget revenues by 0.35 percent of GDP, or $3.4 billion. In order to manage windfall oil receipts, the government established a stabilization fund in 2004 worth. By the end of 2006, the fund was expected to be worth almost $80 billion, or about 7 percent of the country’s nominal GDP. Raw materials, such as oil, natural gas, and metals, dominate merchandise exports and account for over two-thirds of all Russian export revenues.

Although estimates vary widely, the IMF and World Bank suggest that in 2005 the oil and gas sector represented around 20 percent of the country’s GDP, generated more than 60 percent of its export revenues (64% in 2007), and accounted for 30 percent of all foreign direct investment (FDI) in the country.

Kremlin policy makers continue to exhibit an inclination to advance the state's influence in the energy sector. Taxes on oil exports and extraction are still high, and Russia’s state-influenced oil and gas companies are obtaining controlling stakes in previously foreign-led projects. State-owned export facilities have grown at breakneck pace, while private projects have progressed more slowly or have been met with roadblocks by state-owned companies or by various government agencies. (see Oil Exports ).