This piece of work examines how Russia uses energy as a political weapon in its foreign policy with its neighbouring countries and its implications for the whole region of Eastern Europe and Central Asia. Russia uses energy as a tool in foreign policy in both terms: to reward its friends and punish its enemies. Further, it will put thorough light on major incidents of the European as well as Caspian states that suffered repercussions of this policy. Undoubtedly, Russia is one of the world’s energy superpower, which possesses abundant natural gas reserves, second largest coal reserves and eighth largest crude oil reserves. Therefore, Putin’s ambition is to transform Russia into a global energy superpower. Russian oil and gas resources have prominent role in the global energy market, especially in the Europe and Eurasia. Energy is a strategic resource for Russia and it had been quite instrumental to increase its influence in Europe, Central Asia, and the Caspian Sea region.