Strangle Putin’s fuel supplies

Ukrainian drone strikes strangle Putin’s fuel supplies

Refinery attacks have triggered a fuel crisis and halted Moscow’s lucrative gas exports — as pressure grows on the Russian president to start negotiating.

By Gabriel Gavin, Veronika Melkozerova, Victor Jack and Seb Starcevic

A creeping barrage of Ukrainian drone strikes on Russian oil infrastructure has knocked out a major share of the country’s crude refining capacity in recent weeks, triggering domestic shortages and leaving the Kremlin’s most important strategic industry teetering on the brink.

The crisis comes as Ukraine’s Western allies say economic pressure is the best way to force Russian President Vladimir Putin to end his war. Three European officials told POLITICO of a shared assessment that a combination of sanctions and targeted disruption would press Putin to come to the table.

The Ukrainian armed forces reported another round of explosions over the weekend at facilities across the south of Russia, including at the Krasnodar and Syzran plants, which produce a combined 11 million metric tons of gasoline a year.

While the impact of the damage is difficult to assess, analysts estimate that between 15 percent and 20 percent of Russia’s fuel production is now offline, leading Moscow to impose an export ban and causing queues to form at gas stations in provincial cities.

The EU’s ambassador to Ukraine, Katarína Mathernová, said that bringing the war to ordinary Russians is one of the few tactics that seems to get a response from the Kremlin.

“You have lines for petrol in Russia … because the Ukrainians with their deep strikes were able to disrupt the oil deliveries,” she told POLITICO. “So this kind of pressure works, and we just need to keep at it and not get sidetracked.”

Kyiv has been carrying out such strikes for more than a year but the effects are now being felt more than ever, as the cumulative impact of sanctions and an absence of Western technical support makes the damage harder to repair.

According to Philip Ingram, a retired British army intelligence officer, the tactic is “a crucial part of the war” championed by Ukrainian intelligence chief Kyrylo Budanov.

“He’s got hold of the old Allied Special Operations Executive manual from WWII and he’s adapted that to this conflict — attacking the Russians at an operational level, targeting their ability to continue the tactical battle by supplying the military materials and manpower,” Ingram said.

“[Ukrainian President Volodymyr] Zelenskyy has said Ukraine cannot win in a straight tactical fight on the front lines in the East, but whoever dominates the operational level tends to win the overall conflict.”

Meanwhile, an official from the Security Service of Ukraine (SBU) told POLITICO that the drone strikes are a form of "sanctions" that are designed to "reduce the inflow of foreign currency that Russia needs to wage war."

Step on the gas

Putin has bemoaned the "constant strikes on our energy facilities" and has threatened to continue his bombardment of Ukraine's civil energy infrastructure.

But Russian officials have been forced to extend the ban on gasoline sales abroad through to September as a result, depriving the Kremlin of much-needed foreign currency. Homayoun Falakshahi, head of crude oil analysis at intelligence firm Kpler, said that was a clear consequence of some of Russia’s largest plants being knocked out.

The destruction at Rosneft’s Ryazan and Lukoil’s Volgograd refineries has “pushed an estimated 700–750,000 barrels a day of capacity offline, or about 10 percent of total [production],” Falakshahi said.

According to figures shared with POLITICO, Kpler estimates that Russia’s overall crude refining throughput is now down to roughly 5.1 million barrels a day, well below the 5.6 million typical for this time of year. Adding to the headaches for industry chiefs, many plants are due to undergo maintenance this month, potentially meaning extended downtime as they struggle to meet domestic demand.

Illia Neskhodovskyi, lead analyst at Ukraine’s National Interests Protection Network, said gasoline shortages were already widespread throughout Russia: “There is not enough gasoline in Karelia, there is not enough gasoline in the Khabarovsk Territory, there is not enough gasoline in the Far East, there is not enough gasoline in Primorsky Krai. If we look at the price tags, the price is somewhere around 20-25 percent more than the official statistics give, so these are real losses for Russians and for carriers.”

Time to talk?

Yuriy Boyechko, CEO of the pressure group Hope for Ukraine, said he expected the economic pain to bring Russia to the negotiating table this fall.

“If Ukraine continues its strikes against Russia’s oil infrastructure into mid-fall, it could trigger serious economic problems within Russia — problems that may force Putin to negotiate in good faith and end the war,” Boyechko said.

European and American politicians are eyeing an opportunity for a renewed diplomatic offensive after Putin last month jetted to Alaska for an unprecedented sit-down with President Donald Trump. The visit was widely seen as the result of hefty new tariffs imposed by Washington on India over its continued purchases of Russian oil, exerting massive pressure on one of Moscow’s key economic partners.

The EU is also expected to unveil a new package of sanctions in the coming weeks, the 19th to be imposed on Russia since its full-scale invasion in February 2022. While major new energy restrictions are understood to be unlikely, an options paper discussed by diplomats at an informal meeting of energy ministers last week, obtained by POLITICO, showed Brussels is considering replicating America’s tariff strategy to inflict further pain on the Russian economy.

In the meantime, Ukraine is taking matters into its own hands. Strikes on Russia's Druzhba pipeline, carrying oil to Kremlin-friendly Hungary and Slovakia, have caused major cutoffs in recent weeks. Budapest has announced sanctions against a Ukrainian drone commander, himself an ethnic Hungarian, and demanded that Brussels take action. The EU, meanwhile, has said it foresees no security-of-supply issues for the bloc as a result — instead doubling down on its efforts to drain the Russian war chest with a total phaseout of Russian oil.

Tina Dolbaia, an associate fellow at the Center for Strategic and International Studies, said the refinery attacks could “escalate from a temporary hiccup into a budgetary dilemma” for Moscow if they continue through the fall. 

“So far, the Russians seem to be mitigating the impact of these attacks by purchasing petroleum from Belarus to offset domestic shortages and pressuring refineries to intensify their maintenance work,” she said. 

“However, if the attacks remain frequent and more destructive as Ukraine continues to develop its long-range capabilities, Russia’s capacity to repair damaged refineries will be further strained … This, in turn, could put downward pressure on global oil prices and impact Moscow’s budget revenues from the energy sector-related taxes.”

According to Ingram, the British former intelligence officer, the Russian economy is “not on the brink of collapse” — yet.

“We’re probably talking about another 12-18 months until Putin gets really worried,” he said. “But if the Ukrainians increase their activity, that could certainly come down very, very quickly.”