Ukrainian drone strikes are hurting Russia’s oil industry

Selling more oil at higher prices ought to be the stuff of dreams for a petrostate. But for Russia it is a sign of a new, punishing phase in its war with Ukraine. Months of Ukrainian drone strikes on refineries have crimped Russia’s ability to produce refined fuels, such as diesel and petrol, and turned the world’s third-largest oil producer into an importer of petrol. Energy firms have tried to pare their losses by selling unrefined oil overseas, pushing exports to a ten-month high in March.

In Ukraine’s most recent attack on April 2nd, its planners extended their reach. They managed to land explosives on a refinery 1,115km from the border. Their attack set fire to a unit responsible for 3% of Russia’s refining capacity. Although it left no lasting damage, others have been more successful. All told, Ukraine’s barrage has knocked out a seventh of Russian refining capacity, according to S&P Global, a data firm. Maintenance work and flooding in the city of Orsk on April 8th has taken more capacity offline. Wholesale prices on the St Petersburg International Mercantile Exchange have spiked. Ukraine, which has itself been the target of strikes on energy infrastructure, hopes the assaults will slow the flow of dollars into its enemy’s war machine and dent support for the war.