Ukraine’s hellfire is intensifying the Kremlin’s fuel crisis
At the end of August, Reuters reported that about 17% of Russia’s oil-refining capacity had been at least temporarily taken out
UKRAINE CONTINUES to inflict deadly damage on Russia’s energy infrastructure, and the tempo is accelerating. The concerted Ukrainian drone attacks on oil refineries and other parts of Russia’s fuel-distribution system began in August, and the number of strikes is rising from two or three a week to four or five. Soon they will be daily. In the past week or so, Ukraine has badly damaged a big oil export terminal at Novorossiysk on the Black Sea, a refinery complex in Bashkortostan (over 1,300km from Ukraine), and a pumping station in Chuvashia, 1,000km away. A major refinery in Yaroslavl was hit on October 1st, but the Russians claim this was “technical”, and not caused by a drone attack.
On September 25th Ukraine’s commander-in-chief, Oleksandr Syrsky, referring to the wider “DeepStrike” campaign that has struck 85 “high-value” targets in less than two months, said: “The capabilities of the enemy’s military-industrial complex have been significantly reduced; we can see this on the battlefield.”
But while General Syrsky pointed to attacks on military infrastructure and weapons factories, it is the unrelenting focus on refineries which is doing most to change the narrative about the war, even appearing to help change Donald Trump’s mind about Ukraine’s prospects.
At the end of August, Reuters reported that about 17% of Russia’s oil-refining capacity had been at least temporarily taken out. That figure now is certainly higher. Some unconfirmed reports suggest that as much as 40% of it has been affected with about 20% down at any one time. That represents a loss of more than 1m barrels a day according to Energy Aspects, a research group. Sergey Vakulenko of the Carnegie Russia Eurasia Centre cautions that the numbers are dynamic because most facilities can be repaired. However, he acknowledges that what is happening now is on a different scale from previous campaigns.
Benedict George, head of European oil-product pricing at Argus Media, an energy-market intelligence firm, says that Ukraine has hit 16 out of Russia’s 38 refineries and that although repairs are possible, damage becomes lasting when refineries are subjected to repeated attacks. Some, he says, have been hit up to three times. They include one of Russia’s biggest fuel-processing plants at Ryazan, which is 200km from Moscow and can normally produce 340,000 barrels a day. The destruction of the cracking units that break down crude oil into petrol, diesel and aviation fuel is a major difficulty because they are very costly, and because the sanctions regime makes them extremely hard to replace.
Mr George says that diesel exports are as much as 30% lower than a year ago and are at their lowest since 2020. Because Russia is the world’s second-biggest exporter of diesel, wholesale prices have been climbing sharply. The impact is also being felt across a widening number of regions in Russia with long queues, of a kilometre and more, for petroleum products at filling stations from Vladivostok in the Far East to Volga near Moscow. Some authorities are introducing rationing. Russian-occupied Crimea has been especially hard hit, with motorists limited to buying 30 litres of fuel.
In response to the growing crisis, on September 25th Russia’s deputy prime minister, Alexander Novak, announced both a partial ban on diesel exports and extended an earlier ban on petrol exports to the end of the year. The squeeze, says Mr Vakulenko, who was strategy director at the oil-and-gas giant Gazprom Neft until 2022, is particularly being felt by independent Russian energy firms and oil-market speculators. Oil-product markets, he says, have become “extremely agitated”. In 2023, according to open-source analysis, Russia’s exports of refined petroleum products were worth $52.1bn.
Oil-pumping stations and storage depots have also been hit by Ukrainian strikes, including a massive attack in mid-September on Primorsk, Russia’s largest oil-loading port on the Baltic Sea. However, says Mr Vakulenko, such facilities are harder to damage permanently and so far there has been little indication of a reduction in Russian crude exports. But crude exports are a much lower-margin business for Russia than selling refined products.
“The Ukrainians are on a roll,” says Sir Lawrence Freedman, a British strategist. “The Russians have a problem. They can’t stop this and the Ukrainians have no reason to let up.” Part of the problem the Russians face is the sheer number of targets that are available, the size of the area over which they are dispersed and the erosion of Russian air-defence capabilities after more than three years of war. Although the one-way attack drones the Ukrainians are using fly relatively slowly and carry warheads of only between 60 and 120kg, they have the range and the accuracy to do serious damage.
About 60% of the deep strikes on Russian territory are carried out by Ukrainian Fire Point FP-1 drones, which with a smaller payload can reach targets 1,500km within Russia and have sophisticated software that has proved resistant to intense electronic-warfare jamming. But critically, notes Olena Kryzhanivska, an expert on Ukrainian weapons systems, the FP-1s cost only about $55,000 each and are now being churned out at a rate more than 100 a day. Ukraine is also using the heavier and more expensive Lyutyi drone, which has a range of 2,000km, and a battle-tested machine-vision system to guide it to its target.
There are also reports that FP-5 “Flamingo” cruise missiles have begun to be used. They are much faster than the drones, flying just 50 metres above the ground, with a range of over 3,000km and packing a huge punch thanks to a 1,150kg warhead. If the FP-5 proves capable of penetrating Russian air defences it will bring a new level of destructiveness to Ukraine’s DeepStrike campaign. Its range allows it to fool defences by flying on constantly changing vectors towards its target. To make the FP-5 Fire Point uses repurposed Soviet-era turbofan engines, and its carbon-fibre fuselage takes just six hours to produce. Fire Point is currently making two or three of the FP-5s a day, but that number is expected to rise to seven later this month. Each cruise missile costs about $500,000. By contrast, an American Tomahawk missile costs four times that, has a shorter range and carries a much lighter payload, though it is probably more accurate and harder to shoot down.
While Russia’s strategic air campaign is primarily focused on terrorising cities, Ukraine’s is aimed directly at Russia’s ability to sustain the war. As Mr Vakulenko notes, it is not about to bring Russia’s economy “to a screeching halt”. But the damage to the earnings Russia depends on to fuel its war is only going to get worse. And ordinary Russians increasingly feel that the war is coming to them.
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