Ukraine has stepped up drone strikes on Russian refineries this year
With 32 major refineries and roughly 6.5 million barrels per day (mb/d) of installed refining capacity, Russia has historically been the world’s third-largest producer of refined oil products, after the United States and China. However, a long-standing Ukrainian campaign of deep drone strikes on Russian refineries has intensified significantly over the past 18 months. In June, Russian refinery throughput fell to 3.8 mb/d, its lowest level in more than 20 years and roughly 30% below a year earlier. Reported gasoline output is down by 20% compared with 2025 levels, while diesel production is estimated to have fallen by nearly 30%, prompting the government to restrict fuel exports to protect domestic supplies. Ukraine has targeted Russian oil infrastructure since 2022, when Russia’s full-scale invasion began. However, the growing range and impact of Ukrainian drone strikes in 2025 and 2026 point to a dramatic expansion of Ukraine’s technological and military capabilities. In the first eight months of 2026, a Russian refinery was hit on average once every three days.
Ukraine is increasingly using multiple waves of drones against individual refineries, seeking to overwhelm protective netting and other largely passive drone defence measures. Its long-range capabilities and targeting have also advanced rapidly, particularly during the first half of 2026. This expanded reach enabled the 7 July strike on Gazprom Neft’s 450 thousand barrels per day (kb/d) Omsk refinery, Russia’s largest, roughly 2,500 kilometres from the Ukrainian border.
Some refineries, particularly those closer to Ukraine, have now been attacked as many as 15 times since 2022, with significant damage reported to both primary and secondary crude oil processing units across the country. As of late August 2026, only five major Russian refineries remained untouched by Ukrainian drones. All are situated in eastern Siberia or the far east of the country, between around 3,500 and 6,500 kilometres from the Ukrainian border – currently beyond the reach of Ukraine’s most advanced long-range drones.
Secondary refining units have become a key target
As Ukraine becomes more effective at striking Russian refineries, it is increasingly targeting specific refinery units in an effort to maximise the impact of each strike. In addition to attacks on crude distillation units (CDUs) – where crude is initially processed at a refinery – Ukraine looks to be targeting secondary units such as fluid catalytic crackers (FCCs), hydrocrackers, reformers and hydrotreaters. These units increase yields of lighter products such as gasoline, jet fuel and diesel – the latter two products are referred to as middle distillates – and improve their quality. Damage to these more complex units can lengthen the time needed for repairs and potentially require their replacement.
Minor damage to a CDU can typically be repaired within one or two weeks. However, repairs to more complex secondary units, particularly those that have suffered serious damage, can take six to eight months on average. The 250 kb/d Moscow refinery was so severely damaged during a Ukrainian attack on the capital in June 2026 that it is reported to be offline until early 2027. As more units are damaged, replacement times are increasing, with Western sanctions limiting Russia’s access to some equipment suppliers.
Russian refiners have sought to maintain output as much as possible by delaying scheduled maintenance, bringing mothballed units back online and accelerating repairs. However, with some refineries – particularly those closer to the Ukrainian border – that may now be recovering from their 10th or even 15th attack, repeated cycles of damage and repair could degrade units or lead to further issues down the line.
Despite these measures, Russia saw widespread fuel shortages over the summer when motor fuel demand sees a seasonal upswing. By the end of June, fuel shortages were reported across 92% of Russia’s regions, with two-thirds introducing fuel rationing measures, such as purchasing limits and QR-code systems. Some motorists reported wait times of up to 40 hours at fuel stations.
While conditions had improved by late July, another wave of attacks in the second half of August led to renewed shortages. On 26 August, Russia’s government statistics agency Rosstat reported that the average price of gasoline had risen by more than 19% since the start of the year, while diesel prices were up by roughly 18%. The rising prices and fuel shortages are a shock for Russian consumers accustomed to a relatively stable, subsidised fuel market.
Russia’s Ministry of Energy has also introduced a measure temporarily lowering fuel-quality standards, allowing higher-sulphur grades of gasoline to be produced, imported and distributed for the first time since 2016. The measure, which runs through 1 July 2027, permits fuels meeting Euro 2, 3 and 4 specifications – older, less stringent standards than those previously required – suggesting that secondary units such as FCCs, hydrocrackers, hydrotreaters and reformers have seen significant damage. Meanwhile, Russia has also relaxed its fuel blending requirements, allowing naphtha blended with octane enhancers to qualify as gasoline. While these measures have helped stabilise Russia’s domestic market, they come with trade-offs. Higher-sulphur fuels can lead to vehicle engine damage or result in the degradation and deactivation of catalysts, which are used to reduce vehicle emissions and require the use of sulphur-free fuels. To further maintain domestic fuel supplies, Russia has also begun importing gasoline. While it has received gasoline by rail from Belarus and Kazakhstan, neither country has the refining capacity to fully meet Russia’s current deficit. Russian oil companies have also resorted to importing gasoline by sea, with cargoes from Morocco, Korea, India and Türkiye arriving in July and August.
In late August, President Vladimir Putin of Russia signed a decree allowing the government to take temporary control of privately owned businesses or infrastructure deemed “critical” if owners fail to take adequate security measures or delay restoration. The decree includes energy sector facilities and is broad enough to allow the state to take control of independent refineries. With oil refineries considered responsible for ensuring adequate defence of refineries against ongoing strikes, the decree adds to the challenges facing oil companies as attacks continue, alongside rising security and repair costs.
The attacks are also weighing on Russian oil and gas revenues
Barring a sustained truce between Ukraine and Russia, the attacks on Russian oil infrastructure are likely to continue, adding further pressure on Russia’s oil sector revenues. According to Russia’s Ministry of Finance, between April and August 2026, Russian oil companies received RUB 1.5 trillion (USD 18 billion) in subsidies, including through the damper mechanism, which compensates refiners when product export prices are higher than domestic fuel prices. While oil and gas revenues have been supported by the global rise in crude prices amid the conflict in the Middle East, total fiscal revenues for January-August remain almost 17% below year-earlier levels, at RUB 5 trillion. Meanwhile, Russia’s overall budget deficit has continued to rise, reaching RUB 5.8 trillion for the first eight months of 2026, up by 150% from the same period in 2025 and already surpassing the RUB 5.6 trillion shortfall recorded for the whole of last year. The current frequency and intensity of attacks suggest that crude processing rates will struggle to recover meaningfully from recent levels. The work required to return damaged units to operation is increasing, while the cumulative impact on refinery reliability remains uncertain. As a result, the IEA’s latest monthly Oil Market Report has lowered its forecast for Russian refinery throughput to an average of 4 mb/d for the remainder of 2026 and for 2027.
The loss of Russian volumes is adding further pressure to global diesel markets
The sharp fall in Russian diesel output and exports is contributing to the severe pressures facing international middle distillate markets. Global seaborne gasoil and diesel exports averaged 4.7 mb/d over the first eight months of 2026, down 10% from year-earlier levels, with declines accelerating in the second and third quarters. Sharply lower exports from the Middle East have made diesel markets more vulnerable to the loss of Russian supplies. Preliminary data indicate combined Middle East and Russian diesel exports fell to 520 kb/d in August, 75% below the same month a year earlier. Higher shipments from the United States and a rebound in Asian exports have provided only a partial offset.
Tighter global diesel markets have resulted in inventory draws, particularly in the United States. This market tightness has increased diesel crack spreads – the profitability of diesel versus crude – to above USD 100 per barrel in September in both the US Gulf Coast and Northwest Europe.
Heading into the fourth quarter, diesel crack spreads could rise further as seasonal demand strengthens and refineries have more limited scope to respond to further attacks. Across Organisation for Economic Cooperation and Development (OECD) countries, diesel output in June was broadly flat year-on-year despite high utilisation rates, as refiners maximised jet fuel production to avoid shortages during the peak summer demand period. This suggests that the OECD refining system is close to its practical limit for middle distillate output, constrained by disruptions to Middle East crude exports, weather-related processing issues and refinery maintenance deferred from the spring.
The diesel market tightness that followed Russia’s full-scale invasion of Ukraine in 2022 was eased by a surge in Asian exports, particularly from China. However, a similar reprieve looks less certain this time, given continued disruptions to crude supplies from the Middle East, high OECD refinery utilisation rates and upcoming seasonal maintenance. Unless refining activity recovers in Russia or the Middle East, or demand weakens rapidly, global diesel markets are likely to remain under pressure for months to come.
Source: IEA
