Frequent drone attacks by Ukrainian drones on Russian oil refineries have severely reduced refining capacity, creating fuel shortages and putting the Kremlin’s most important industry on the brink of crisis, writes Politico.
The fuel crisis is coming at a time when Western countries have concluded that economic pressure is the best way to force Russian dictator Vladimir Putin to end the war in Ukraine.
Ukrainian forces have reported attacks over the weekend on refineries in southern Russia, including in Krasnodar and Syzran. They process 11 million tons of fuel annually. While it is difficult to assess the impact of the attack, analysts have estimated that about 15 to 20 percent of Russia’s oil refining capacity has now been lost. It has prompted Moscow to ban imports and has led to queues at gas stations in provincial cities.
The EU ambassador to Ukraine, Katarína Mathernová, said that bringing the hardships of the war to ordinary citizens is one tactic that seems to be influencing the Kremlin. She said that the queues at gas stations caused by Ukrainian strikes are pressure that works and cannot be abandoned.
Kiev has been carrying out such strikes for more than a year, but now they are becoming more noticeable as
Western sanctions make it increasingly difficult to repair the damage.
According to Philip Ingram, a retired British army intelligence officer, such tactics are an essential part of the war. Ingram said that the head of Ukraine’s intelligence service, Kirill Budanov, has adapted tactics used by the Allies in World War II and is attacking the Russians, destroying their ability to supply the battlefield.
In turn, an official from the Security Service of Ukraine (SBU) told Politico that the drone attacks are a form of sanctions designed to reduce the inflow of foreign money that Russia needs to continue the war.
Putin has lamented the ongoing attacks on energy facilities and threatened to continue destroying Ukraine’s critical infrastructure.
Meanwhile,
Russian officials have been forced to extend a ban on fuel exports into September,
and the Kremlin is not receiving the funds it planned from other countries. The head of crude oil analysis at the intelligence firm Kpler said that the shutdown of the Ryazan and Volgograd refineries has resulted in a loss of processing capacity of 700,000-750,000 barrels per day, about 10% of the total refining capacity in Krasnodar. In addition, many refineries are scheduled for maintenance in September, which will further increase downtime at a time when domestic demand is struggling to meet demand.
Illia Neskhodovskyi, a senior analyst at the Ukrainian National Interests Protection Network, said that Russia is already facing widespread fuel shortages: “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.”
Yuriy Boyechko, executive director of Hope for Ukraine, said he hoped that economic difficulties could bring the Russians to the negotiating table this fall.
European and US politicians are waiting for opportunities to renew diplomatic attacks
after Putin unexpectedly traveled to Alaska on the 15th of August to meet with US President Donald Trump. The visit was seen as a result of US sanctions against India, one of Russia’s main oil buyers and a key economic partner for Moscow.
The EU is also expected to impose a new package of sanctions. While new, significant energy sanctions are unlikely, Politico has learned that the Europeans are considering using the US tariff strategy to constrain the Russian economy.
Meanwhile, Ukraine has taken matters into its own hands. Attacks on the Druzhba pipeline, which carries oil to Russia-friendly Hungary, have caused significant supply disruptions. This has prompted Budapest to impose sanctions on the commander of Ukraine’s drone unit (who is ethnic Hungarian) and demand that Brussels take action. The EU has responded by saying it sees no security of supply problems and is stepping up its efforts to completely cut off Russian oil from entering the bloc.
Tina Dolbaia, an assistant at the Center for Strategic and International Studies, said that if attacks on refineries continue into the fall, the problems could turn from temporary hiatuses into a budget dilemma for Moscow. She said that so far the Russians have seemingly managed to mitigate the impact of the attacks by buying fuel from Belarus to cover domestic shortages. “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,” Dolbaia said.
Ingram, however, noted that the Russian economy is not yet on the verge of collapse. He added that it could be about 12 to 18 months before Putin really starts to worry, but if the Ukrainians continue the attacks, the economy could collapse very, very quickly.
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