Daring refinery raids are bringing the war back to Russia

 The glow that lit up the central Russian sky on Wednesday was not the usual rose-fingered dawn. The Yaroslavl oil refinery, Russia’s oldest and fifth largest, went up in flames just before 6.30am local time.

The regional governor immediately denied that it had anything to do with Ukrainian drones, blaming the blaze on a technical fault. That is always possible.

But the wider truth is that two months of Ukrainian strikes on Russia’s refining sector has produced a crisis at the pump. At least 16 out of Russia’s 38 refineries have been hit since the start of August, with strikes so regular that refinery “bingo cards” have appeared online to chart the destruction. Some refineries have even been fitted with nets, akin to the improvised protections fitted on Russian tanks and Ukrainian front-line roads, to shield them from drones.

Matters are about to get even worse for Russia. The Trump administration has now said that for the first time it will provide intelligence to help Ukraine hit energy infrastructure far inside Russia. America may even go as far as providing the long-range missiles – with a range of up to 1,500 miles – to do the job.

Even before America’s intervention, wholesale petrol prices had surged 50 per cent since January to a record high of 64.11 Russian rubles (almost 60p) per litre. And the fire in Yaroslavl will only make prices worse.

“It is serious,” says Tatiana Mitrova, research fellow at the centre on global energy policy at Columbia University. “Russian press reports that 38 per cent of primary refinery processing capacities are idle. This is a big number. You have to keep in mind Russia does have excess capacity for production of about 20 per cent, so around 40 per cent idle means a 20 per cent deficit,” she adds.

About 70 per cent of that idle capacity – around 236,000 tonnes per day – is down to Ukrainian drone strikes, according to the RBC business daily.

Occupied Crimea is suffering most, with at least half of the peninsula’s petrol stations running dry despite emergency rationing rules. Sergey Aksyonov, the head of the region, has had to appeal publicly for “patience”. On Wednesday, he cut the ration from 30 to 20 litres per person.

In the far east, the south and the Volga republics, authorities have reported 20 per cent deficits. Many local authorities have imposed a limit of 30 litres or even less per customer. Queues more than a mile long were reported at petrol stations on the M12 highway between Kazan to Moscow on Wednesday.

Even in Moscow and St Petersburg, some petrol stations have imposed limits of 60 litres and some drivers have reported the disappearance of 95 octane fuel, Russia’s standard retail grade of petrol.

Lukoil, Russia’s second largest producer, has banned the use of jerry cans at its stations to pre-empt panic buying in the capital.

The cause

Part of this is down to structural industrial weakness.

“We saw fuel crises in 2019 and 2013, before the war, before the sanctions, before everything. So it’s kind of an intrinsic quality of the Russian refining industry,” says Alexander Kolyandr, senior fellow with the Democratic Resilience Program at the Centre for European Policy Analysis.

But Ukraine has pressed on a bruise, he adds. “The [crisis] was amplified a lot by a very smart strategy of Ukrainian attacks.

“Unlike in 2024 when the Ukrainians started to bomb the refineries in April, this time they started in August, which is the peak demand season [due to holidays and harvest]. “Secondly, they managed to keep those attacks at such a level that the refineries are unable to repair all the damage and come back to 100 per cent output quickly.”

Demand was even higher than usual this summer because frequent airport shutdowns caused by Ukrainian drone raids meant that more Russians opted to drive rather than fly south, which partly explains why shortages have been so acute in the holiday hotspots of Rostov and Krasnodar.

The Ukrainians also just seem to be scoring more hits.

Refinery raids now consist of multiple drones flying in several waves to overwhelm air defences, making it difficult to start firefighting and repairs. A direct hit on a refinery’s furnace can put the entire facility out of action for months. Sanctions mean that it is much more difficult to procure spare parts for repairs.

The result, says Kolyandr, is “a perfect storm of declining production and increasing demand, and the unwillingness of the government to let the market set the price”.

The effect

This is important. The strikes are unlikely immediately to affect the war effort: supplies for the armed forces, whose tanks mostly run on diesel anyway, will be prioritised above all. Agriculture will also benefit from government support – the Kremlin has used export bans in summer to cover the harvest in the past.

But Putin is sensitive to the war in Ukraine impacting everyday life in Russia. The refinery strikes have forced Russia’s government to admit that Ukrainian drone attacks are effective, and will cause grumbling among the ordinary Russians trying to find petrol to get to work in the morning. Undoubtedly, it is ordinary consumers who are suffering most.

And it adds to a growing economic burden.

A combination of falling oil revenues and massive war spending are fuelling a record budget deficit that the Russian finance ministry projects will hit 2.6 per cent of GDP by the end of the year, up from an initial forecast of 0.5 per cent.

The government is proposing raising VAT from 20 to 22 per cent to cover the gap. Meanwhile, growth overall is anaemic, with the finance ministry revising down its forecast for GDP growth this year from 2.5 per cent to just 1 per cent.

Andrey Klepach, the chief economist at state-owned investment bank VEB, has said the economy contracted in the first two quarters of 2025, meaning that Russia is already in a technical recession.