Ukrainian drone strikes have forced Russia to import gasoline—shipping cargoes from as far as Morocco to an Arctic port—and to pay for the damage twice over. Moscow now subsidizes both the refineries the drones keep setting on fire and the foreign fuel replacing what those refineries can no longer produce.
Ukraine’s drones have forced Moscow to subsidize both the refineries they keep setting on fire and the foreign gasoline.
Russia caps fuel prices at home below what refiners could earn abroad, and the budget pays them the difference—so they keep supplying the domestic market rather than exporting everything. The payments, together with related reimbursements, reached 1.221 trillion rubles ($15 billion) from April through July, Finance Ministry data show—close to the full annual budget of Moscow Oblast, the region ringing the capital.
Those monthly payments have roughly halved since spring, to about 190 billion rubles ($2.4 billion) in July, as lower oil prices narrowed the gap the subsidy fills.
Russia cannot keep its refineries running
Russian crude processing fell to 3.6 million barrels a day in July, its lowest since 2002 and roughly a third below the seasonal norm. Ukraine has hit at least 24 of Russia’s 34 largest refineries in some 50 strikes.
Fuel shortages and rationing now affect 50 million people—about a third of Russia’s population—according to a Financial Times analysis. Russia runs the world’s third-largest oil-refining industry, so the lost output has tightened diesel and gasoline supply beyond its borders. With less capacity to refine at home, Russia has had to export more raw crude and less high-value fuel.
With its refineries down, Moscow is now paying a second subsidy—this time to the importers bringing gasoline in. Gasoline is arriving by rail from Belarus and Kazakhstan and by sea from India and, in mid-July, Morocco: a cargo loaded at the port of Tangier and discharged at Murmansk, on the Arctic coast.
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Ukraine has already named the import route as a target. In early July, presidential sanctions commissioner Vladyslav Vlasiuk called Russia’s new reliance on imported fuel a fresh vulnerability and said Kyiv had raised a response with the European Commission—though the EU’s next sanctions package, now in preparation, is so far built mainly around other measures.
A country that ships crude out of the Arctic is now shipping gasoline in through it.
