As of: March 30, 2024, 7:33 a.m
By: Mark Stoffers
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Ukraine's drone attacks on Putin's oil refineries appear to be having an effect. Russia's oil industry has to accept heavy losses in production.
Moscow – The latest developments in the Ukraine war have left their mark on Russia's economy. Ukraine's drone attacks on the country's oil hubs and refineries are dealing a major blow to President Vladimir Putin's oil industry. This is one of the absolute cornerstones of Russia's economy, which is under pressure and is already threatened with isolation.
Russia Economy: Putin's oil industry is in trouble after Ukraine's drone attacks
Gasoline production in Russia has fallen significantly after a series of attacks by Kiev on the country's oil refineries, according to figures available to the US news portal
Newsweek
, among others . Accordingly, the Russian Federal State Statistics Service
Rosstat
said that the country's gasoline production fell significantly in the week ending March 24 compared to the previous week. According to reports from local media, production is said to have fallen by around 7.4 percent from 815,300 tonnes to 754,600 tonnes.
To counter the risk of shortages on the domestic market, Russia turned to the government of Putin's ally Alexander Lukashenko on Wednesday,
according to
Reuters
. The possible help from Belarus is intended to give the Kremlin autocrat's oil industry the opportunity to carry out extensive emergency repairs to the oil refineries following the drone attacks in Ukraine.
Russia's economy in trouble: Putin's government increases gasoline imports from Belarus
Four industry and trade sources told the news agency that Russia, suffering from inflation and the Ukraine war, increased its gasoline imports from Belarus to almost 3,000 tons in the first half of March. In comparison, one of the world's most resource-rich countries imported 590 tons in February and not a single ton in January.
Moscow depends on its oil exports and energy industry, which account for about 30 percent of the country's budget revenue and play a crucial role in financing the war in Ukraine. Russia is the third largest oil producer in the world, accounting for more than 12 percent of global crude oil production.
Western sanctions have hit Russia's economy hard - Moscow bans gasoline exports
Western sanctions have severely affected Russia's energy industry. These were imposed in response to the invasion of Ukraine. Meanwhile, Putin's government has banned gasoline exports for six months since March 1 to offset the rise in fuel prices in the country.
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After the Ukrainian drone attacks, Russian President Vladimir Putin has to watch as Russia's oil industry is severely affected. © Sergey Bobylev/imago
Earlier this year, Kiev stepped up its attacks on Russia's main arteries and refineries. On January 18, Ukraine launched a drone attack on an oil terminal in St. Petersburg, about 1,000 kilometers from the Ukrainian border. Another drone attack on Russia on January 21 near St. Petersburg hit a key gas export terminal, causing a major fire and halting fuel deliveries. Ust-Luga is Russia's largest Baltic Sea port, and the Ukrainian Security Service (SBU) claimed responsibility for the attack, the
Kyiv Post
reported.
Various drone attacks in Ukraine are damaging Russia's economy and Putin's oil industry
Earlier this month, even a botched drone strike in Russia sparked a massive fire at a massive oil refinery. At the time,
Bloomberg
reported
that the refineries that had to shut down within a week accounted for 12 percent of Russia's national oil refinery capacity.
Reuters
estimates that number has now risen to 14 percent.
The latest victim to shut down operations due to Ukrainian drone strikes is a Russian oil refinery near the Volga city of Samara, said to be owned by Rosneft.
Reuters
reported this
on Thursday, citing two industry sources.
Attacks on Russia's economy: Putin's reserves are being put on a "hard test"
Sergei Vakulenko, a researcher at the Carnegie Russia Eurasia Center, estimated in January that the consequences for Russia's oil industry will be "serious if we see the beginning of a wave of attacks on western Russian oil refineries." “Either way, Russia’s reserves of resilience and ingenuity are likely to be severely tested. The speed and quality of repairs will be the key indicators of Moscow's readiness," Vakulenko told
Newsweek
at the time .
However, Ukraine is clearly not interested in stopping drone attacks on Russia's oil refineries. The head of Ukraine's Security Service (SBU), Vasyl Malyuk, said this week that the SBU was behind all attacks on Russian oil bases and that these attacks would continue. A circumstance that is likely to cause further headaches in the future for Kremlin autocrat Putin, who wanted to shine with economic issues before the Russian election and scored an own goal.