Ukraine's escalating drone attacks have led to significant disruptions in Russia's fuel supply, impacting multiple sectors of the economy. Fuel shortages have reportedly become a pressing issue in various Russian regions, with drivers and gas stations grappling with increasing scarcity. The attacks, which have specifically targeted Russian oil refineries, have disrupted production and reduced refining capacities, creating a crisis in the domestic fuel market.

According to Russian local media, regions such as Primorye, including cities like Arsenyev, Ussuriysk, and the Chuguyevsky district, have been experiencing fuel shortages since early August 2025. These bottlenecks have resulted in long queues at gas stations, with many either closed or running out of stock. Local authorities have attributed the shortages to "minor interruptions" in petroleum product supply and potential equipment damage due to intensive summer usage.

Wholesale gasoline prices in Russia have surged to record highs. Data from the St. Petersburg International Mercantile Exchange shows that the price for AI-92 gasoline reached 71,500 rubles per tonne and AI-95 gasoline climbed to 80,400 rubles per tonne by August 18, 2025. Russian media attribute this surge primarily to ongoing Ukrainian attacks on Russian oil refineries, targeting critical operational units to disrupt Russia's export capabilities.

Market Signals

Sector Impacts and Opportunities: Russian energy companies face existential risks, while global refiners and US/Canadian oil suppliers benefit from higher prices and increased demand.
Price Movements and Volatility: Wholesale gasoline prices in Russia have hit record highs, indicating domestic inflationary pressures.
Competitor Positioning Changes: India and China are benefiting from lower Urals crude prices, while Russian energy companies face restricted access to capital.

Winners & Losers

Winners: US and Canadian oil/gas suppliers, global refiners, counter-drone technology providers, India, and China. Losers: Russian energy companies, the Russian economy, Russian consumers, Hungary, and Slovakia (due to the Druzhba pipeline halt). Supply chain implications include the disruption of the Druzhba pipeline and Russia's pivot to crude oil exports.

Action Timeline

Immediate: Continued volatility in oil and gas markets is expected. Businesses should hedge against price fluctuations.
Short-term: Companies reliant on Russian energy need to accelerate diversification strategies.
Long-term: Build alternative, reliable energy and commodity supply chains for resilience.

Risk Assessment

Regulatory Risks: Existing and potential future sanctions on the Russian energy sector.
Market Volatility Factors: Supply shocks from attacks, ongoing uncertainty.
Geopolitical Tensions: Risk of broader escalation due to reciprocal attacks on energy infrastructure.

Key Indicators

Market Signals: Attacks are causing disruptions to Russia's energy supply, impacting domestic and global prices.
Leading Indicators: Monitor the frequency and targets of Ukrainian attacks, Russian responses, and European energy policies.

Regional Perspective

Ukrainian attacks strategically target Russian energy infrastructure, leading to domestic fuel shortages and price hikes. This has significant economic and social implications within Russia, affecting daily life and the war economy.

Immediate Implications

What Happens Next: Continued pressure on Russia's fuel supply and rising prices.
Time-Sensitive Opportunities or Risks: Increased demand for counter-drone technology and the search for alternative energy sources.

What to Watch

Leading Indicators: Frequency of Ukrainian attacks, Russian responses, European energy policies, global oil price trends.
Expected Developments: Continued energy market volatility, efforts to diversify energy sources.
Key Decision Points: Decisions on sanctions, investments in renewables, political stability in Russia.

Analysis

The Ukrainian attacks on Russian refineries are seen as an effective economic warfare strategy, aimed at undermining Russia's financial capacity to fund its war. Targeting key revenue streams like refined product exports has far-reaching consequences for the Russian economy and its political stability.