The paper seeks to evaluate the scope and limits of the Russian state’s capacity to use oil and natural gas as strategic resources to revive Russia’s fortunes as a credible global power. It offers an analysis of the evolution of state-markets interactions in the energy sector from the late Gorbachev era to the present day. The paper briefly documents how Russian foreign policy became more assertive using energy as a strategic resource, particularly in crafting its relations with the European Union. Subsequently, the paper analyzes Russia’s limits of using energy as leverage in securing foreign policy objectives. Finally, it points to the impediments to normalizing a Russo-EU energy dialog.