By Eric Vandenbroeck and co-workers

Why Ukraine’s Campaign Against Moscow’s Energy Sector Is Working

In considering the many effects of the war in Ukraine on the Russian economy, few suspected that fuel shortages would be one of them. After all, Russia is an oil-rich country whose energy infrastructure is far from the frontlines; for most of the war, it has been Ukraine, not Russia, whose energy grid has been in the line of fire. Yet since August, when Ukraine began a concerted campaign to strike oil refineries deep inside Russia, fuel shortages have come to preoccupy Russians. By late October, Ukrainian drones had hit more than half of Russia’s 38 major refineries at least once. As a result, Russia went from processing about 5.4 million barrels of oil per day in July to processing roughly 5 million barrels per day in September. Production outages spread across multiple regions, and some Russian gas stations began rationing fuel. By late October, additional strikes, including at refineries in Ryazan and Saratov, further underscored the reach of Ukraine’s campaign.

With such results, it may be tempting to conclude that Ukraine is on the verge of breaking Russia’s oil industry. But that is not the case. Despite the serious damage they are causing, the attacks are unlikely to change Moscow’s resolve in the near term. For the time being, the Russian refining sector still has enough resilience, because of both its substantial surplus capacity as the world’s third-largest refining system and its ability to repair damaged units quickly. The Russian government also has a variety of tools it can use to maintain a relative equilibrium. Moreover, for Ukraine, there is also the risk that the campaign will cause Moscow to step up its own attacks on Ukrainian infrastructure and energy systems as the country enters the fourth winter of the war.

But the attacks on refineries could—if they can be sustained at the current pace—have far-reaching effects over the longer term. As Russian resilience is relentlessly tested, it is gradually being worn out. Although the units used to distill crude oil can be repaired relatively easily after every attack, they erode after the repeated cycles of heating and cooling caused by strikes. And as Russia’s oil industry grows more reliant on government interventions for crisis management, the energy sector will become state-managed and less efficient. In truth, the real damage caused by Ukraine’s campaign is cumulative and institutional, not physical. Even as it strives to preserve short-term stability, Russia is presiding over the acceleration of long-term decline.

 

Oil Rich, Fuel Poor

Part of the challenge of assessing the effects of Ukraine’s strikes comes from the sheer size and complexity of Russia’s downstream oil sector. Russia currently has roughly 6.5 million barrels per day of refining capacity spread across about 40 refineries, with the biggest clusters in the Volga region, the Urals, and around Moscow. Russia also exports, on average, two million barrels per day of oil products. Under ordinary circumstances, the system has a fairly large cushion built in, even though fuel supplies can be constrained occasionally during periods of peak seasonal demand.

The current fuel shortages, which are the most notable since the start of the full-scale war in 2022, are not the result of only Ukrainian attacks on refineries. For one thing, the Russian fuel market gets stretched every summer by a combination of high agricultural demand, high rates of driving, and refineries shutting down for annual maintenance. This summer, demand was heightened further because more Russians traveled by car to avoid flight cancellations and train delays that were caused by Ukrainian drone attacks on transport infrastructure.

Another factor is that the Russian government has increasingly intervened in the country’s fuel market in the name of price stability and inflation control. Its main mechanism, known as the “price-damper,” is a subsidy that compensates refiners when domestic fuel prices fall below export parity. But as the government has become pressed for funds, it has increasingly shifted the burden of subsidies to manufacturers and retailers, using threats to keep the market supplied, as often happens under rigid price controls. Trying to keep fuel prices stable has removed important price signals for both consumers and producers and disturbed the balance of supply and demand. At times of low profitability, the biggest oil companies keep their own gas stations supplied with fuel but sell as little as possible to independent retailers. Independent stations and small retail networks make up almost 70 percent of the Russian retail fuel market, but move less than a quarter of the fuel supply. They nevertheless play an important role by bringing fuel to motorists in less affluent and sparsely populated areas. When the big oil companies cut their supplies to independents, people in the countryside suffer disproportionately.

Rosneft office building, Moscow, October 2025

 

Swarming Menace

Nonetheless, the most salient cause of the shortages has been the dramatic shift in Ukraine’s long-range drone strike capabilities. In 2023 and 2024, Ukraine rarely attempted to target energy infrastructure deep inside Russia, and when it did, it did not target the same refinery repeatedly. Throughout this period, only a few refineries within 250 miles of Ukrainian-controlled territory were hit regularly. Now, Ukrainian strikes can reach as far as Tyumen in Siberia—1,360 miles away—and Ukraine has been targeting many refineries across western Russia on a recurring basis.

Take the Volgograd refinery, a large plant with a capacity of 300,000 barrels per day. It has been hit no fewer than five times in two months, with the latest attack coming just days after Russian repairs brought it back on line. Although these repeated attacks cannot destroy a refinery, they can keep it constantly in need of repair, stretching spare-parts supply chains that are already constrained by sanctions. Since August, especially, Ukrainian drone attacks have become more successful, thanks, in part, to U.S. intelligence. Ukraine now has both the capacity and the confidence to regularly launch large-scale drone swarms at multiple targets across Russia—successfully overwhelming Russian air defenses.

The effects of the attacks have also been amplified by the way the Russian refinery system is organized. Soviet-era planning created regional duopolist refineries. One or two refineries are responsible for serving a large area (usually made up of several oblasts and millions of people); when one is down, shortages ripple quickly across adjacent areas. This means that a successful Ukrainian attack can create a shortage for a large territory that Russia will have to then supply by rail from hundreds of miles away. And if neighboring refineries get hit simultaneously, these problems invariably snowball.

 

Death By a Thousand Cuts

The real impact of Ukraine’s attacks, however, is likely to come over the longer term. As with other aspects of the war, the battle over energy infrastructure can be won only by a carefully calculated war of attrition. No single strike will kill the system, but a sustained, up-tempo campaign increases the likelihood of cascading failures, longer repairs, and compounding losses of capacity. Unless Moscow makes a breakthrough in anti-drone defenses, something neither side has achieved since the full-scale war began, Ukraine’s efforts will continue to inflict damage.

In this sense, the overall outcome will depend on a series of shifting variables. These include how quickly Russia can repair refineries; how many times a unit can be repaired before it must be replaced; the number of drones needed to overwhelm air defenses; and how many drones Ukraine can deploy and for how long. Drone warfare is a numbers game. In any given operation, most attacking drones will be shot down. Their purpose is to saturate the air defense system; for a single attack to be effective, dozens, if not hundreds, of drones must be launched, each carrying at least 110 pounds of payload. The most effective attacks involve strikes on multiple refinery units at the same plant, and the same plants must be repeatedly struck as the damage from the previous raids gets fixed. Keeping up a successful campaign against refineries requires thousands of drones a week sustained over several months.

This is a game where the attacker has the advantage. Just as Ukraine has been forced to do in protecting its cities and infrastructure from Russian bombardment, Russia cannot provide enough cover for all refinery targets and must choose which to protect. Shifting air cover from site to site over vast distances takes time. Meanwhile, the attacker can switch targets at will.

Although its defenses have proven unable to hinder the attacks, Russia has begun to make other adaptations. Refineries are adding improvised overhead netting and shielding, for instance. Such measures may look rudimentary, but even small deviations in a drone’s trajectory can be the difference between a dent and a catastrophic fire.

 

The Great Energy Duel

Paradoxically, Ukraine’s campaign against Russian oil installations draws on the lessons of Russia’s own campaign against Ukrainian infrastructure. Since the early phases of the war, Russia has targeted Ukrainian energy infrastructure, aiming to disrupt the Ukrainian economy and crush morale. In 2023 and 2024, Ukraine could barely keep pace in repairing the damage as Russia inflicted it. Now, as Russia’s offensive capacities have only grown, this has become an unwinnable race.

In March, Ukrainian President Volodymyr Zelensky tried to persuade Russia to agree to a moratorium on air strikes against energy infrastructure—to no avail. In this sense, Kyiv’s refinery campaign is partly a form of deterrence, partly a form of retaliation. It seeks to impose the kinds of costs on Russia that Russia has long imposed on Ukraine. In theory, this could force an informal mutual moratorium on energy strikes, since they come at high cost to both sides. But so far, the result has only been escalation.

For Ukraine, attacking refineries is also a particularly effective way to target Russia. Attacks on pipelines, fuel storage facilities, and railroads have had more transient effects: they generally can be returned to operation within days. But refineries, with their big and complex equipment, remain the more vulnerable and symbolically potent targets.

In recent weeks, Ukraine has augmented its campaign with a more multipronged effort to hamper Russian oil exports. Ukraine now routinely attacks pumping stations on pipelines that lead to export outlets. It has also expanded the scope of its attacks to third parties involved in Russia’s energy trade. On November 2, for example, Ukrainian drones attacked Russia’s Black Sea port of Tuapse, damaging a Turkish tanker.

There have also been several sabotage incidents against non-Russian ships carrying Russian crude, likely caused by limpet mines, although Kyiv has not claimed responsibility for these. Ukraine has even hit the pumping stations, terminal, and Novorossiysk offices of the Caspian Pipeline Consortium—which helps export oil produced in Kazakhstan through the Black Sea—with air and water drones. Such operations have a dual purpose. Militarily, they aim to impose costs and uncertainty on Russia’s export logistics. Strategically, they are meant to dissuade third parties—ship owners, insurers, and traders—from doing business with Russia.

But for its part, Russia has also found additional targets. Until 2025, Ukraine transitioned Russian gas to European buyers, and as an informal part of the deal, Russia refrained from attacking Ukrainian gas production and pipelines. Now this arrangement is off, and in October, Russia launched a series of massive drone and missile strikes that knocked out 60 percent of Ukraine’s domestic gas production during a crucial period ahead of the winter.

 

Stability At Any Cost

By late September this year, Ukrainian strikes had reduced Russia’s refining production by roughly 10 percent. Yet so far, despite the intensity of the campaign, Russia has been able to keep the impact mostly local and temporary. Fuel shortages and retail price spikes have largely been confined to particular regions—mainly southern Russia, the far east of the country, and Crimea. The Kremlin responded by imposing temporary gasoline export bans and partial diesel restrictions. It also redirected supplies and tapped reserves.

These measures come at a price. Each new layer of government intervention or control tightens the state’s grip over the sector. Already, fixed margins, quota systems, and emergency decrees now define the operating environment for the oil industry. The Kremlin, for example, responded to the September fuel shortages by issuing several ad hoc executive decrees and Energy Ministry orders that prioritized deliveries of gasoline and diesel for agriculture, public transport, and defense needs; capped wholesale and retail fuel prices in several regions; and temporarily suspended exports of gasoline and some diesel blends to stabilize the domestic market. The more the government intervenes, the less incentive companies have to increase supplies to the domestic market. Although they may prevent immediate chaos, these moves are undermining the oil sector’s long-term adaptability.

One of the most counterintuitive effects of Russia’s refinery outages is their impact on exports. When Russia loses its refining capacity, it must reduce its exports of oil products. Yet it can recover much of the lost revenue by simply exporting the crude that would have been otherwise refined in Russia. For the government, this matters little, since it collects petroleum taxes at the wellhead. For companies, however, the losses from selling low-priced crude instead of refined oil products can reach $10 per barrel or more. Moreover, on October 23, the United States announced new sanctions aimed against key oil companies, including Lukoil and Rosneft; these measures are likely to put temporary pressure on Russian crude exports, compounding the strain on the country’s oil sector.

Moscow faces a dilemma. On the one hand, high gasoline prices cool demand and bring the market into balance. On the other hand, the government has pledged to keep fuel prices stable, intervening to do so if necessary. Such interventions are costly and keep demand artificially high, but not doing them risks lower approval ratings and eroding public trust in Russia’s stability.

For now, Russia retains enough redundancy and repair capacity to keep the system afloat. Yet the accumulation of damages and the effects of heavy-handed state management are eroding efficiency and resilience. Even if Ukraine cannot destroy the oil industry, it can force Moscow into making costly tradeoffs. Russia must decide whether to defend its refineries or its armaments plants; whether to prioritize exports or domestic supply; whether to divert resources to repair refineries as fast as possible or use those resources elsewhere. Each dilemma narrows policy options.

Thus far, Moscow’s response to the supply crunch has been remarkably consistent: contain, control, and compensate. The Kremlin is determined to prevent visible shortages that could undermine public confidence, but the tools it relies on—export bans, fixed margins, subsidies—are locking the sector into stagnation. Russian refiners must now operate with little market autonomy; many are postponing investment decisions “until after the war.” Refineries are still running, but with deferred maintenance, rushed emergency repairs, and a mounting backlog of safety and efficiency issues. The result is not collapse, but quiet degradation.

 

Petrification of the Petrostate

Three variables will make a difference in the long-term fate of Russia’s oil industry. The first is Ukraine’s strike tempo—whether Kyiv can maintain or increase the number, payload, and frequency of drone attacks. Equally important is Russia’s repair capacity, or how quickly damaged units can be restored and whether spare-parts shortages become binding. Finally, the third variable is oil prices and OPEC+ policy: a drop in prices, for example, would test Russia’s ability to sustain both subsidies and military spending simultaneously.

If its refining capacity is further constrained, Russia can also fall back on lower fuel-quality standards, increasing the supply of naptha-derived gasoline and high-sulfur diesel. Such moves could help alleviate shortages at the expense of air quality and engine longevity. The government is also counting on Belarus to help, potentially supplying up to 30 percent of Russia’s gasoline needs. But these fixes can only mitigate rather than eliminate the long-term effects of the impending oil crunch.

Kyiv cannot break Russia’s oil industry overnight. But by forcing Moscow into constant firefighting—whether putting out actual refinery fires or preventing a second-order economic conflagration—these attacks ensure that Russia will have to pay an ever higher cost to maintain stability. For now, the refineries will keep operating, the pumps will keep running, and exports will continue—but with rising costs, shrinking margins, and a reduced capacity to recover from attack.

What Ukraine’s campaign has exposed about Russia is really a deeper vulnerability: an energy superpower whose strength lies in infrastructure built decades ago, maintained through improvisation, and preserved by command rather than innovation. In the end, Russia’s refineries are most likely to wear out under the weight of repeated shocks and institutional sclerosis—a quiet but telling metaphor for Russia’s war economy itself.

 

 

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