Comparing the Ukrainian strikes on Russian oil refineries in spring and summer 2026 with those carried out in 2025, the situation has clearly deteriorated. The number of attacks has risen sharply — from 88 for the whole of last year to 9−16 per month in May-July this year. Their average range has nearly doubled, from roughly 400 km to 800 km, with some targets hit as far as 2,500 km away. More importantly, the Ukrainians have shifted from hitting primary distillation units to striking more complex cracking and hydrotreating equipment, which cannot be properly repaired without imported components.
By mid-2026, every major Russian refinery had been hit. Many plants in the European part of the country — including those in Ryazan, Kirishi, and Moscow, as well as Lukoil’s facilities in Nizhny Novgorod and Perm — were forced to shut down for a month or longer. Particularly damaging was the fact that virtually all refineries supplying the Moscow region with gasoline and diesel via product pipelines were either taken offline or significantly reduced output. In addition to refinery strikes, Ukrainian forces also targeted oil loading terminals in Ust-Luga, Primorsk, Tuapse, and Novorossiysk.
The choice of targets was effective. The oil sector is unusually vulnerable: while drone damage to most industrial sites can usually be repaired relatively quickly, fires at refineries can burn for days and oil spills at sea are far harder to contain.
Economic Damage
Using open-source data, the costliest strikes appear to have been those on Ust-Luga (estimated direct damage of 12 billion rubles), Tuapse (around 20 billion rubles in direct damage, with indirect costs from coastal pollution potentially several times higher), Ryazan (30 billion rubles), and Yaroslavl (15 billion rubles). The losses from, for example, the strike/damage to the Wildberries warehouse in the Moscow region reached 50 billion rubles, but we will focus only on the fuel infrastructure in this article.
These figures almost certainly understate the true cost, as official assessments usually reflect only the book value of destroyed assets. Restoring complex refining units often requires replacing or repairing adjacent equipment and partial dismantling of surrounding structures.
If the Ryazan refinery (idle for more than three months) and the Moscow refinery in Kapotnya (reportedly unable to resume production until early 2027) are treated as effectively out of action, restoration costs can be benchmarked against the deep modernization of eight Russian refineries in the 2010s, which exceeded $ 10 billion at the time.
Given that all of Russia’s largest refineries have been struck and as of 27 July, only eight of the 26 plants that had been attacked and forced to halt production had managed to return to full operations, cumulative damage is likely at least $ 6−7 billion. While this is modest compared with the cost of the war itself, it roughly equals the total value of Russia’s crude oil and petroleum product exports in an average week in June 2026.
Another important factor emerged in March, when rising global oil prices (driven by the conflict in the Persian Gulf) prompted the government to sharply increase damping payments to domestic oil companies. These payments, designed to stabilize internal fuel prices, reached 120 billion rubles in June — seven times the January level — yet still failed to prevent price increases. In effect, the Finance Ministry was paying oil companies each month an amount comparable to the cumulative damage inflicted by Ukrainian strikes since the beginning of the year.
If the attacks stop, experience from 2025 suggests that Russian refining capacity could recover within three to four months, largely through the companies’ own efforts and without major additional state funding.
Strikes on refineries must be assessed together with strikes on ports. When refining capacity is knocked out, Russia reduces exports of petroleum products and increases shipments of crude oil instead (in 2024 the shares were 35% products and 65% crude — 132 million and 240 million tons respectively). In summer 2026 the share of products did decline (partly because of the ban on gasoline exports and later on diesel), but total export volumes hardly fell, and seaborne crude shipments reached their highest level in three years (4.11 million barrels per day). The nearly 24% drop in the value of exports in June was not caused by difficulties at the Baltic and Black Sea ports but by falling prices amid hopes of a U.S.-Iran deal and wider discounts on Russian crude in Asia. For the Russian budget it makes no difference whether crude or products are exported — the volume of mineral extraction tax (MET) revenue remains the same. In plain terms, strikes on refineries hurt the Russian economy far more than attacks on seaports.
The reasons are straightforward. Refinery operations affect Russian businesses and ordinary citizens far more directly than export shipments of oil and products. Since 2025 all “oil-and-gas revenues” of the federal budget have been redirected to financing the war (whereas in 2006−2013 the military budget averaged only 29.3% of those revenues). Changes in export earnings therefore have almost no immediate impact on businesses or households. By contrast, disruptions at the largest refineries — independent estimates put current losses at 28−35% of total Russian refining capacity, with plants in Central Russia, the Northwest, and the South hit hardest — create critical shortages of fuel, above all gasoline and aviation kerosene.
Scale and Consequences of the Shortage
Before the war, Russia’s total refining throughput (2021 data) was 285 million tons, of which only 40.8 million tons were gasoline of all grades. Domestic consumption stood at 36.4 million tons. Gasoline accounted for no more than 3.5% of the value of Russia’s petroleum-product exports that year. It is therefore unsurprising that a drop in output from 110−115 thousand tons per day to less than 80 thousand tons — even with a complete export ban — has created a truly catastrophic fuel shortage across most of the country.
The shortage is worsened by the structure of the Russian gasoline market. It is dominated by vertically integrated oil companies (80% of production and up to 75% of refining) that control their own retail networks and in most regions either monopolize or divide the market between them. Strikes on the Ryazan, Yaroslavl, or Kirishi refineries (owned by Rosneft, Slavneft, and Surgutneftegaz respectively) therefore automatically cut supplies to the corresponding regions by more than 50%. Russian authorities have openly admitted they cannot defend the plants and have told the big companies to buy their own air-defense systems. Independent retailers, which could normally help stabilize the market through flexible pricing, are not receiving enough fuel on the exchange. Problems existed before, but the authorities have now tightened controls in classic Soviet fashion: instead of raising the mandatory share of gasoline sold through the exchange, they lowered it from 15% to 10%. At the same time, part of the available fuel is being reserved for the police, security services, and the bureaucracy — a measure that has already triggered open protests in several regions. Together these steps only deepen the shortage.
It is hard to list every restriction currently in force across Russian regions; the situation changes daily. As of July 1st limits on refueling — usually one full tank, 50 liters, or 20 liters, or refueling by license plate or QR code — have been introduced in at least 60 federal subjects. Some regions have switched to coupon systems or have simply allowed fuel to disappear from free sale altogether. The most critical situations are in occupied Crimea, the Lipetsk, Saratov, and Irkutsk regions, and Dagestan. In Moscow, after the strike on the Moscow refinery, the authorities arranged emergency deliveries by tanker from neighboring regions and from Belarus. This quickly eased the shortage in the capital but worsened it in the surrounding regions. By the end of the month, a number of the largest petrol station chains had begun gradually lifting or easing restrictions. Nonetheless, in the majority of Russia’s regions, strict limits on gasoline sales remained in force.
In early July, gasoline production in Russia fell to 65% of average seasonal consumption, estimated at a minimum of 110,000 tons per day. This gap cannot be closed by Belarusian supplies (currently 5 thousand tons per day) or by purchases abroad. The Finance Ministry has urgently extended the damping mechanism to imported fuel, first for gasoline (Belarusian gasoline arrives at no less than 111,000 rubles per ton while the domestic wholesale price is 75,000 rubles; the state is ready to subsidize the difference) and later for diesel, whose shortage is especially acute during the harvest. Tax and law-enforcement agencies are also cracking down on speculation: at the request of the Federal Antimonopoly Service (FAS), private individuals are now banned from advertising gasoline sales on Avito, Ozon, and Wildberries.
The government has also suspended or relaxed a number of standards introduced in recent decades. Refiners and retailers have been allowed to sell Euro-3 gasoline as Euro-5 (this will not damage car engines but will increase emissions of harmful substances). Even more questionable measures have been authorized: motor gasoline may now be used in small aviation, and the production of low-octane “straight-run” gasoline with various additives (including methyl tert-butyl ether and mono-methylaniline) has been permitted. These additives are strong solvents and oxidizers that can shorten engine life. It is precisely this kind of fuel that the small “mini-refineries” whose expansion Putin endorsed at a government meeting are capable of producing.
An obvious result of the shortage has been the fastest rise in gasoline prices in twenty years. By mid-July the retail price of gasoline had increased 16.4% since the end of December 2025; the average price of diesel rose 18.0%. Alternative calculations show an even sharper jump: in early April A-92 averaged 63.6 rubles per liter nationwide and A-95 69.0 rubles; in central Russia these grades are now freely available only at 80−86 and 85−95 rubles respectively — an increase of more than 25%. In some regions the rise has been steeper still (in Dagestan and Chechnya, weekly increases of 12−16% were recorded). Reports from many regions indicate that gasoline without queues now costs 120−140 rubles per liter and that prices continue to climb. The situation cannot be fixed quickly, especially if AFU strikes continue. We should therefore examine both the direct economic damage and the effect on budget indicators.
Budget Losses
The price of gasoline affects the economy mainly through the cost of transport services and electricity generation. Transport accounts for about 6% of Russia’s GDP, and liquid motor fuel makes up to 30% of the sector’s costs (sometimes as much as 60% for road haulage; rail transport runs largely on electricity). The cost of electricity and heat will also rise because of higher fuel-oil prices, but fuel oil is still in surplus and no shortage is expected. The fuel crisis can therefore be estimated to add roughly one-thirtieth of the rise in petroleum-product prices to overall inflation — that is, 2.5−3.5 percentage points (or somewhat more if transport and energy companies try to raise tariffs speculatively and retailers increase mark-ups in anticipation of further price growth). The situation will also affect agriculture, but we should not overstate the problem: fuel accounts for no more than 10% of agricultural production costs, so a 2−3% increase will not change the picture dramatically. Many producers built stocks for the harvest season right after sowing. Although reports of possible harvest disruptions in some regions are already circulating, they should be regarded more as lobbying signals than as a genuine threat — especially since local authorities appear to have taken notice.
The impact will vary by sector. The hardest hit will be those operating on thin margins, such as intercity passenger bus services, whose operators will be last in line for rationed fuel. Commercial airlines are also under pressure because of the aviation-kerosene shortage and price spike, although airport closures caused by drone threats create far bigger difficulties. Delivery problems to remote areas and small settlements are likely, where low demand already squeezes retail margins and makes businesses especially sensitive to sharp rises in transport costs.
On the budget side the picture looks less alarming. Revenues from domestic fuel sales have always been substantial: in different years, taxes have accounted for 58−73% of the retail price of gasoline (roughly 30% MET and about 40% excise taxes, VAT, and other levies). On the basis of earlier sales volumes these taxes could bring in up to 900 billion rubles a year — 2.2−2.6% of federal budget revenue. That figure may now fall by 15−20%, or 150−200 billion rubles annually, because of lower production and sales. However, there is an offsetting factor. The Finance Ministry pays damping compensation to companies for producing fuel and selling it domestically; the higher the gap between world oil prices and domestic gasoline prices, the larger the payments. If that gap narrows, the damping mechanism can be suspended entirely (the ban on setting it to zero has not applied since May 1). Budget savings on damping payments could then exceed the loss of tax revenue from gasoline sales by a factor of four to seven. Even if the actual numbers are smaller, it is safe to say that neither regional nor federal budgets will suffer serious damage from higher prices and the gasoline shortage.
In short, the Russian economy will not collapse and there will not be substantially less money available to finance the war. For a complete picture, however, we should say a few words about the impact on the combat capability of the Russian army and on public sentiment inside Russia.
A Strike Not on Tanks, but on the Loyalty of the Population
When assessing how the fuel crisis affects Russia’s ability to continue the military conflict, it is essential to distinguish between direct and indirect effects. The direct effect would be if the shortage deprived the Russian army on the front line of mobility or complicated the delivery of ammunition and other supplies. Economically, this question is not even worth serious consideration. The needs of the fighting army are given absolute priority today; even the recent removal of spending caps was driven primarily by pressure from the Defense Ministry. At the front and in the occupied territories no more than 8,000 tanks and armored vehicles and about 20,000 ordinary transport vehicles are in use. This implies that the entire grouping consumes roughly 15,000 tons of petroleum products per day (Ukrainian specialists have arrived at similar figures on the basis of CO₂ emissions). Gasoline accounts for about 20% of that total — around 3% of Russia’s overall consumption. For aviation, drones, and missiles, even assuming 2,000 drones and 20 ballistic missiles launched daily, the requirement for aviation fuel does not exceed 1,000 tons per day — the amount needed for ten round-trip flights of a wide-body passenger jet between Moscow and Vladivostok. To imagine that Russia could not find that much kerosene would be the height of naïveté. What matters more for combat effectiveness is the logistics of petroleum products, not their production. A growing volume of information shows that AFU strikes are cutting supply lines and destroying dozens of fuel tankers on occupied territory. This appears to be a more important factor in reducing the Russian army’s combat capability than strikes on refineries deep inside Russia.
The indirect effect is far more significant. Large-scale Ukrainian attacks directly affect the daily lives of ordinary Russians, reminding them every day that the war — which in Russia is still officially called a “special military operation” being fought somewhere far away — has arrived on Russian soil with all its consequences. In 2023−2025 macroeconomic problems such as high inflation did not seriously damage the authorities’ ratings. Internet restrictions introduced at the beginning of 2026, however, did, because they prevented people from using services they regarded as part of their normal way of life. Prolonged gasoline shortages will be an even harsher test for the Kremlin. They will force citizens to lose faith in the authorities’ policies. It is this loss of faith — not the inability to refuel a tank or a missile — that could become the most serious challenge facing the Kremlin under current conditions, unless skillful Putinist propaganda manages to frame the situation as foreign aggression to which the population must respond not with criticism but with even greater support for the leadership.
