Russia: Government inefficiency in the face of Ukrainian attacks on refineries

On 30 September, the Russian government decided to extend restrictions on fuel exports. By the end of 2025, Russian entities will be subject to a complete ban on the export of petrol and a partial regulation on sales of diesel, among others. On the same day, the Council of the Eurasian economical Commission (the body of the Eurasian economical Union) temporarily abolished duties on fuels imported into the common marketplace from 10 October. According to media reports at the end of September, Deputy Prime Minister Aleksandr Nowak asked Prime Minister Mikhail Miszustin to take another measures to regulate the fuel marketplace – including the anticipation of expanding fuel production at the expense of environmental standards. The Russian Parliament will besides consider a law extending subsidies to the sector.

The regulations introduced by the Kremlin are a consequence to fuel deficits, the origin of which has been a wave of Ukrainian attacks on fuel infrastructure facilities since July (see. Russia: evidence gas prices due to the wave of Ukrainian drone strikes). Over the last 3 months, Ukrainians have attacked at least 16 separate refinery facilities, carrying out more than 30 drone strikes. The request for state intervention demonstrates their advanced effectiveness. Despite the usual decline in request for fuel after the summertime season, tension in the interior marketplace continues to persist, as indicated by regional petrol deficits and government action.

Comment

• The effectiveness of the regulation remains questionable if Ukrainian attacks proceed to succeed. Each of the solutions introduced or proposed by the government represents only a short-term remedy and increases the costs borne by the authorities to guarantee satisfactory supply within the country. Given the widening scale of Ukrainian strikes – and thus the attack besides on distribution stations and export terminals – it can be considered that the ongoing run is not opposed by the western partners of Kiev (as was the case in 2024). In the event of maintaining the frequency and effectiveness of impacts, part of the refinery capacity will inactive be shut down, which will force decision makers to bear the costs of insufficient fuel supply.
• It is not possible to estimation the real scale of the refinery power exemption. At the end of September, manufacture sources estimated that they ranged from 15 to 30% of full processing capacity, i.e. up to 2 million bbl/d. The media estimates of harm up to nearly 40% of the full processing capacity are non-verifiable. Firstly, downtime in refineries varies in severity and not always the impact on installations with circumstantial capacity is identical with the full exclusion of nominal refinery power. Second, dense repair work is underway on damaged facilities. According to manufacture reports, any of the installations attacked in August were to resume work at the end of September. Moreover, the refining capacity in Russia has not yet been utilized to the maximum degree – hence the anticipation to reduce the deficit by expanding the strength of refining on undamaged facilities. All of this is besides subject to information censorship by the authorities, making it hard to measure the severity of the blows.

• As a consequence of Ukrainian attacks Russia is forced to increase natural oil exports. According to the Reuter Agency's calculations, in September, the western FR ports sold 2.5 million bbl/d of oil abroad – about 25% more than in August (500 1000 bbl/d). erstwhile account is taken of all exports of natural material, it has reached evidence levels in terms of volume since May 2024. Most likely, this increase is mostly motivated by the deficiency of oil processing capacity. The forced increase in its exports is detrimental to the Kremlin – this results in a decrease in global prices on the basis of which the Russian government taxes the extraction of this natural material. Moreover, the request to bring in abroad fuel to satisfy interior residence besides generates costs. The decision-makers will most likely search to "hiddle" consumers with actual fuel costs by covering the difference between abroad and intra-Russian prices.
• The importance of the problem is evidenced by the persistent price dynamics within Russia, which is confirmed by the advanced fuel rates in the wholesale market. Importantly, there was an increase in diesel prices in September, both in stock exchange and in detail. This shows an expanding scale of refinery capacity exemptions, which no longer only affect petrol production, but translates into the cost of individual consumers. According to Rosstat data, from December 2024 until the end of September 2025 retail prices of petrol rose by 9.2% and diesel by 3.7%; however, the increase in diesel prices accelerated importantly in the second half of September (the overall increase in consumer prices measured by the office was 4.3%). The pro-inflationary nature of the simplification in fuel supply creates a dilemma for the Russian authorities – the increase in prices reduces the likelihood of a simplification in advanced interest rates, blocking economical activity. At the same time, the Kremlin's determination to control retail fuel prices generates expanding costs on the state budget side.

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

Map. Attacks on Russian refineries between 1 July and 1 October 2025

Source: own development.