Russia: evidence gas prices due to the wave of Ukrainian drone strikes

On 21 August, the wholesale prices for 2 types of petrol in Russia – 92- and 95-octane – reached the highest levels in history: 73.1 and 81.4 1000 rubles per tonne, respectively. The autumn 2023 price evidence was broken erstwhile the decision of the Russian authorities to temporarily reduce the subsidy of the sector led to point fuel deficits at petrol stations (see IP/10/283). Gas fire suppression: a fuel marketplace crisis in Russia). Since the beginning of this year, petrol rates have increased by about 50%, especially in the summer. This led to a ban on its exports to all companies in the sector from 28 July to the end of August (the regulation does not apply to sales to the countries associated with the Eurasian economical Union). Despite government intervention, price increases have not stopped – since mid-August there has been a deficiency of this fuel in any regions of the Russian Federation (e.g. occupied Crimea, the Zabaykalian Country, the Mediterranean Country).

The gas price leap is simply a direct consequence of Ukrainian attacks on the oil and fuel sector. In the summer, unmanned aircraft hit at least 10 different refineries in Russia, resulting in harm to the installation and production being stopped in a crucial part of these plants. It is estimated that the current wave of attacks – damaging among others the largest home refineries in Riazania and Volgograd, producing fuels primarily intended for the interior marketplace – led to the exclusion of more than 10% of the full refining capacity in Russia. Restoration of refining requires corrective work, which is hampered by the imposition of a sanctioning government that complicates the import of spare parts. It should be noted that most of the Russian car park uses diesel, which reduces the negative implications of a fall in petrol production for the full FR economy.

Comment

• Ukrainian shocks effectively disrupt the Russian fuel market, and their efficiency has increased. Although Ukrainians have suspected attacks on refineries and fuel infrastructure since the beginning of full-scale aggression (see IP/10/73). Punishments of Budanov: consequences of Ukrainian attacks on Russian refineries), the current intensification has had the most serious consequences. Compared to the erstwhile bombings in August, they stand out with concentration – they were previously more distributed over time. The fact that effective impacts are carried out during the summertime period – and thus in the period during which request for fuel increases – strengthens their severity for the sector.
• Internal factors, including the policies of the FR authorities, besides influence the deepening of the crisis. Summer increases in fuel prices in Russia are cyclical in nature, due to increased request during the tourist period and harvest, as well as the request to prepare stocks before the autumn maintenance period in refineries. In pre-war conditions, the sector responded seamlessly to an increase in request due to large capacity reserves. According to Argus, the yearly gas consumption in Russia is between 35 and 36 million tonnes, while the capacity of the refinery importantly exceeds this volume (nearly 44 million tonnes of this fuel were produced in 2023). However, in 2024, the authorities classified data on petroleum production, which hinders the manufacture from operating – among another things, it is impossible to forecast the improvement of supply on the basis of authoritative statistics. According to media reports, part of the sector did not decide to increase stocks in the spring of this year – being convinced of the low request for petrol, as well as due to the advanced interest rates reflecting the profitability of lending purchases.
• The hard situation on the marketplace has negative implications for the authorities, forcing them to intervene. Both the pro-inflationary nature of fuel price increases and the presence of point supply shortages The Kremlin sees it as a possible origin of social tension. Moreover, the exclusion of part of the refinery capacity makes it essential to redirect volumes of petroleum products from another plants, which weighs railways and causes logistical congestion. Inability to process oil leads to increased exports of natural material, expanding the force to lower global prices and, consequently, causing lower revenues to the national budget for taxation of the sector.
• The situation is aggravated by the fact that the Russian authorities are not ready to structurally improve the functioning of the market. Its liberalisation - i.e. the release of retail fuel prices - would consequence in a sharp burden on consumers, while expanding subsidies to producers under a increasing budget deficit is problematic. Moscow tries to bridge the external crisis by considering expanding imports from Belarus (decision makers decided to take this step in 2024 during the first wave of Ukrainian strikes). However, this is only a short-term remedy and postpones the introduction of a systemic solution.

ANNEX

Table. Ukrainian attacks on refineries in Russia from 1 July to 23 August 2025

Source: own development.

Chart. Exchange price of selected fuels 30 August 2023, 22 August 2024 and 21 August 2025

Source: SPIMEX.