Russia’s oil empire running low on gas
Ukrainian drone strikes left Russia with serious gasoline shortages. Unable to meet the internal demand, Russia is about to import gasoline from Asia.
At the bottom of this page: Latest news at this hour.
Germany may bring back conscription in 2027… Ukraine hits Russian military plant… Ukrainians trapped in Gaza…
Editor’s Note:
If you appreciate our human-centered journalism, please support us by subscribing.
OUR LEAD STORY:
KYIV, Ukraine — Ask Ukrainian Danylo Huska what he desperately desires for his home, Crimea, and his answer may surprise you: he wants it in complete ruins.
With no electricity, no water, no fuel and no heat.
“[I want them to] sit with their children in basements for a week, wiping themselves with wet wipes, sleeping in underground car parks…Just so they feel it all. Then we can come, take them by the arm, and say, ‘It’s all for the better,’” said Danylo.
The last phrase was what he used to hear from his friend from Russia, who also lived in Crimea. She said it when Danylo, a man in his forties, was crying, unable to help his family suffering from Russian bombardment in mainland Ukraine.
Four and half years into the full-scale war — and his native Crimea is now suffering from the electricity blackouts and fuel shortages on the peninsula.
In fact, an unseen gasoline crisis is unfolding across the whole of Russia after Ukraine carried out a series of air attacks on major oil refineries in occupied Crimea, Moscow and other cities. An acute fuel shortage has already hit 78 of the 85 regions of Russia. The gas purchase restrictions were already in place in 21 regions, leaving drivers standing in long lines for up to 12 hours.
Moscow has tried to make up for the shortage with imports from Belarus and Kazakhstan but both countries have depleted their reserves. Russia, an oil empire itself, might begin importing gasoline from Asia to mask the unfolding catastrophe.
After months of ineffective bilateral talks facilitated by the Trump administration, Ukraine might finally flip the negotiation table, as Russia significantly relies on oil revenues to prolong its war in Ukraine. For the first time since 2022, Russians are feeling notable consequences of the war on their territory, from occupied regions to Siberia.
“They were once acting as heroes. Now, the people still living there — ex-friends, acquaintances, and comrades — are saying: “Don’t fire on us. We haven’t done anything wrong. We’re just ordinary people. We have no say in what happens,” Danylo said.
Danylo was a successful restaurateur in Sevastopol, building his business to the point where it employed more than 100 people at its peak. It was his work — and his wife, whom he had just married in 2014 — that ultimately convinced him to stay in Crimea. Danylo accepted a Russian passport because it was the only way he could continue working there.
“My birthday is on April 1, and a lot of people from Ukraine sent me greetings. On April 2 [2022], I recorded a video in Ukrainian. Two days later, the FSB started hunting me because of it,” Danylo shared, describing the event that ultimately prompted him to leave Crimea.
The picture now unfolding on the occupied territories and Russia is a completely different reality, as Ukraine intensifies attacks on the oil refineries. A number of them were even forced to scale back production or temporarily suspend operations.
Russia produces crude oil, but it must pass through an oil refinery to become gasoline, diesel, or jet fuel. Unlike oil wells, which are difficult to destroy since they are underground, numerous, and time-consuming to restore, oil refineries are stationary, large, often poorly defended, and critical to the entire supply chain.
That is why the Ukrainian army chose it as an easier target to undermine the Russian war economy. June has been an especially successful month for Ukrainian strikes: around 35 percent of successful strikes this year have occurred this month alone, according to defence intelligence company ‘Janes’.
“Disruptions to logistics can create a situation where Russia has sufficient crude oil but lacks the capacity to refine it and deliver fuel to the domestic market in a timely manner,” explained Mykhailo Babiichuk, an expert of DiXi Group think tank.
Currently, gasoline production in Russia is down about 25% compared to last year, according to Reuters. Russian officials are now considering banning exports of diesel fuel, as fuel shortages continue to affect regions all over Russia.
One in four gas stations has imposed sales limits, and the government has permitted refineries to produce lower-quality fuel to restock shelves. Prices have hit a high not seen in several decades.
Crimea appears to be bearing the brunt of the fuel crisis. Retail gasoline sales have been suspended entirely. People in Crimea can buy a mere 20 litres per person. Gasoline is now sold on a black market where gasoline is reportedly selling for 200 rubles ($2.50) per liter, which is more than twice the average price in the U.S.
Danylo’s acquaintances and relatives in Crimea are reluctant to talk about what life is really like in the occupied peninsula. They routinely delete their messages to make sure they can’t be intercepted by the security services. They ask Danylo to do the same, so there’s nothing left to read on either side. They talk only about things like the weather or work.
According to energy expert Babiichuk, each new attack on the oil refineries increases the costs Russian companies must bear to repair damaged facilities, build backup infrastructure, strengthen air defenses, insure assets, and reroute logistics.
“Even if an individual refinery or export terminal resumes operations, the overall efficiency of the system declines while the cost of exporting oil continues to rise,” he explained.
Russia is now in talks with Kazakhstan to import 50,000 metric tons of gasoline, according to Reuters. In addition, Moscow is preparing to import gasoline by sea. To facilitate those imports, the government has already amended legislation to provide subsidies for gasoline importers.
A tanker from Asia is expected at one of Russia’s western ports this month with fuel sourced from an unnamed Asian country after Moscow waived a five percent import duty.
“If strikes continue, Moscow will increasingly be forced to choose between supplying its domestic market and preserving export revenues. The growing costs of repairing damaged infrastructure and adapting logistics will continue to erode the profitability of Russia’s energy industry,” said Babiichuk.
Danylo wants Crimea to be reduced to ruin and attacks on the oil refineries are a part of that, as cruel as that may sound at first.
But beneath that wish lies a profound grief for a home he no longer knows when, or even if, he will see again. He has no idea what will await him if Crimea is eventually liberated. He says most of those who remain on the peninsula today are Russians or collaborators. Still, there are people quietly holding on, waiting for the day the Russian flag is finally replaced by the Ukrainian one.
What he misses most is Crimea’s landscape. Although Danylo has traveled across much of Europe, he says he has never found another place where forests, the sea, mountains, and palm trees growing alongside pine trees coexist.
“I want to come back to a Ukrainian Crimea — to live there with the Ukrainian hryvnia, the Ukrainian language, and in a Ukrainian society, and to help build it,” Danylo said.
Interested in more coverage on how the war affects Russia’s economy? We recommend reading these stories:
The collapse of the Russian economy
Uninvited drones ruined Putin’s big economic party
Why I am happy when oil prices rise
Editor’s Note:
If you appreciate our human-centered journalism, please support us by subscribing.
THE LATEST NEWS AT THIS HOUR
By: Oleksandra Khelemendyk
Good morning to readers; Kyiv remains in Ukrainian hands.
GERMANY MAY BRING BACK CONSCRIPTION IN 2027: The chair of the German parliament’s defense committee said that the government is considering bringing back mandatory military conscription by 2027, which was previously suspended in 2011.
This comes as Germany ramps up military spending in the midst of the increasing threat that Russia poses to Europe. The decision regarding military conscription must be made before July 31, 2027, when the law on military service takes effect. Currently, the German army has about 185,000 career soldiers, but the goal is to increase it to 260,000 by 2035.
UKRAINE HITS RUSSIAN MILITARY PLANT: On Sunday, Volodymyr Zelenskyy said that a Ukrainian FP-5 Flamingo missile hit the Russian Titan-Barricades defense plant, a key producer of artillery systems and missile launchers for the Russian military.
Ukraine has also continued to strike Russia’s oil and gas infrastructure. Overnight, Ukraine struck two oil refineries in the regions of Krasnodar and Yaroslavl (190 miles and 430 miles away from the Ukrainian border, respectively). The Security Service of Ukraine (SBU) also said that it carried out a drone attack on the Vtorovo oil pumping plant in the Vladimir region, which supplies diesel fuel to Moscow and other petroleum products for exports through the Baltic Sea.
Ukraine’s attacks on Russian oil and gas facilities have caused fuel shortages in most regions of Russia. They have also raised the price of petrol by about 25% in the past week, with the occupied Crimea, Donetsk, and Luhansk regions of Ukraine facing the highest price increases.
UKRAINIANS TRAPPED IN GAZA: According to a spokesperson for the Ukrainian Foreign Ministry, Israel will not allow the 40-50 Ukrainian citizens remaining in Gaza to leave. The Embassy of Ukraine in Israel said that, according to Israeli authorities, the individuals do not have the necessary documents to prove their Ukrainian citizenship.
CAT OF CONFLICT:
This cat is being looked after by Mariana’s neighbours and had a peaceful sleep in her block of flats.
Stay safe out there.
Best,
Mariana, Oleksandra, and Petro
 | A guest post by
|
I don't think think that the fuel shortages alone will change Putin’s demands on the war, but will be impactful as another one of the many "sanctions" imposed by Ukrainians!
I think the fuel shortages are more likely to cause Putin to attempt to further escalate, probably by hitting anything he can figure out how to strike with ballistic missiles.
Depending on how well Ukraine weathers that string of attacks, he may find himself in an untenable position internally. Whether that will actually change Russia's behavior further is a question we'll just have to wait to learn.