Ukraine Is Bleeding Russia’s Economy Dry: Ukraine’s long-range strike campaign continues, with a new wave of drone and missile attacks hitting critical Russian energy infrastructure overnight on July 1-2. The ongoing attacks continue to expose one of Russia’s greatest vulnerabilities: an economy that is increasingly dependent on oil revenue to finance its war.
Ukrainian officials say that the overnight attacks struck an oil refinery in Russia’s Nizhny Novgorod region, while Russian authorities acknowledged a strike on an industrial facility.
Russian Tu-160 Bomber. Image Credit: Creative Commons.
The news comes only days after Ukraine successfully hit two other major refineries, and as Moscow looks to source fuel from abroad to fill domestic shortages.
Another Night of Strikes
According to the Security Service of Ukraine, Russia suffered yet more refinery strikes overnight, with the Starolikeyevo oil pumping station in the Kstovo District being hit.
“During the night, Russian air defenses were actively operating in the Kstovo area, after which a series of explosions was heard near the Nizhny Novgorod oil refinery and the Starolikeyevo linear production dispatch station. At least two fires were recorded in the industrial areas of these facilities,” a statement reads.
It is one of the biggest oil refineries in Russia and a critical hub for the country’s main petroleum product pipeline systems. Fuel destined for the country’s central regions is transported through the facility.
Russia Tu-160 Bomber. Image Credit: Creative Commons.
Russia responded to Ukraine’s recent strikes with a missile and drone barrage that targeted Kyiv and other regions all over the country. It was described by the Russian Ministry of Defense as a “massive strike using long-range precision air, land, and sea-based weapons and attack drones.”
Moscow says that the strikes targeted military and industrial facilities, as well as fuel infrastructure in the Ukrainian capital city, and airfields across other regions. However, locals and some analysts continue to warn that Russian strikes appear to be targeting civilian infrastructure, striking residential buildings and other non-military sites.
Kyiv Mayor Vitali Klitschko announced that there were 10 deaths and 34 injuries caused by the strikes.
Russia’s Fuel Crisis Spreads
The cumulative effect of these strikes is becoming more difficult for Russia to handle by the day.
Russian President Vladimir Putin has already publicly acknowledged that Ukrainian strikes are creating fuel shortages – an admission that had to be made after Russian citizens began to feel the pressure at home, and videos went viral on social media showing fights at fuel stations as drivers attempted to fill up their cars.
According to Reuters, gasoline refined in India is now being shipped back to Russia through international traders to help ease shortages. According to the reports, Russia has begun seaborne imports of gasoline from India, with sources claiming that as much as 60,000 metric tons have been shipped to the country so far.
The Kremlin also announced on Tuesday, June 30, that Russia was in talks with other countries about importing fuel at what it called “acceptable” prices.
In late June, at least 55 of Russia’s 83 federal regions, krais, cities, and oblasts were experiencing government restrictions or fuel shortages – and that number is likely to have increased in the wake of more recent strikes. Particularly severe shortages continue in Crimea, with sales for civilian purposes completely prohibited, widespread blackouts, and reports of evacuations from the region as hostilities worsen.
The shortages are having a devastating effect on the Russian economy, with lines forming at fuel stations, gasoline prices surging, and agricultural companies fearing they will have insufficient fuel for harvesting or even to power their irrigation systems. Russia is feeling the heat now, but unless significant repairs are conducted quickly and shortages are plugged by foreign supplies – and Ukraine does not cause further damage – those economic problems are only likely to worsen as time goes by.
Ukraine Devastates Russia’s Wartime Economy
Russia’s wartime economy depends heavily on its energy exports amid ongoing Western sanctions and a worsening labor shortage caused by the mobilization of young Russian men. Despite sanctions, oil and gas still generate a significant share of Kremlin export earnings and provide the tax revenue it needs to fund its record levels of military spending. This year, defense and security expenditures account for almost half of Russia’s federal budget – meaning the government is reliant on its energy sector operating at full capacity to sustain the war.
Every refinery forced offline, and every pumping station damaged, not only causes further damage to the civilian economy but also has consequences well beyond it.
The military also depends on much the same infrastructure, with refineries producing diesel, aviation fuel, and gasoline, all of which are needed to supply armored vehicles, aircraft, rail networks, and more. Without fuel, there is no army – and with no army, there is no war. Repeated attacks are also forcing Moscow to divert its air defenses to protect critical energy assets – and while most missiles and drones appear to be intercepted, Ukraine is causing devastating damage every time one slips through.
About the Author: Jack Buckby
Jack Buckby is a British researcher and analyst specializing in defense and national security, based in New York. His work focuses on military capability, procurement, and strategic competition, producing and editing analysis for policy and defense audiences. He brings extensive editorial experience, with a career output spanning over 1,000 articles at 19FortyFive and National Security Journal, and has previously authored books and papers on extremism and deradicalization.
