As Ukraine Cripples Russian Refining, Global Diesel Markets Pay the Price
- Ukrainian drone strikes have crippled Russia's refining sector, cutting crude processing to its lowest level since 2005 after repeated attacks on major refineries across the country.
- The damage has triggered fuel shortages and export bans, forcing Moscow to halt exports of gasoline, jet fuel, and diesel while increasing fuel imports to meet domestic demand.
- The disruption is tightening global diesel markets, driving refining margins and prices higher as importers seek alternative supplies from the U.S., India, and the Middle East.
Since March, Ukraine has systematically dismantled Russia’s refining system, driving crude processing to its lowest level in 21 years and forcing Moscow to ban exports of gasoline, jet fuel and diesel.
Russian refineries processed an average of 3.91 million barrels of crude per day in early July, according to Energy Aspects data cited by Bloomberg. That was more than 1.4 million barrels per day below the previous year’s average and the lowest national processing rate since March 2005. Ukraine has hit at least 24 of Russia’s 34 large refineries in roughly 50 attacks over the past 100 days.
The July 6 attack on the Omsk refinery removed the last geographic sanctuary inside Russia’s refining system.
Source: Oilprice.com
Omsk lies more than 2,000 kilometers from the front and processed about 22 million tonnes of crude in 2024, making it Russia’s largest refinery. The strike reportedly damaged ELOU-AVT-11, a primary unit capable of processing 8.4 million tonnes of crude and 1.2 million tonnes of gas condensate per year. A second large primary unit, AVT-10, was also reported damaged.
The attack reportedly damaged primary crude distillation units, the equipment that allows a refinery to accept and separate crude oil into usable feedstocks.
Ukraine has spent 2026 moving through the Russian refining system, plant by plant.
Saratov halted operations after a March strike. Kirishi, one of the largest refineries in European Russia, lost capacity after attacks in March and May. Norsi in Kstovo suffered repeated strikes, including reported damage to a primary processing unit. The Moscow refinery was hit several times in June and may remain offline through the end of the year. Syzran, Novokuybyshevsk, Volgograd, Ryazan, Taneco, Ilsky, Afipsky and plants in the Bashneft group have all been attacked.
And overnight on July 14, Ukrainian drones struck the Afipsky refinery in Russia’s Krasnodar region, one of the country’s important refining centers on the Black Sea, while also targeting Gazprom Neftekhim Salavat in Bashkortostan, one of Russia’s largest integrated refining and petrochemical complexes. Ukrainian forces also claimed another 11 vessel strikes in the Sea of Azov, extending the maritime campaign that has disrupted tanker traffic through the Kerch Strait and the Volga-Don waterway.
Repeat strikes have turned repairs into a losing battle. Ukraine returned to the Moscow refinery, Norsi and Syzran after the initial attacks, hitting the same facilities again before operators could restore full output, according to Meduza documentation. Even under normal conditions, a planned refinery overhaul can take weeks or months.
The Exchange Shows What Russia Has Lost
Russia stopped publishing much of its refinery data as the attacks intensified. Fuel trading on the St. Petersburg International Mercantile Exchange provides a clearer measure of the missing supply.
Average daily gasoline and diesel sales held between roughly 118,000 and 150,000 tonnes from January through March, according to Meduza, which analyzed 65,700 transactions. Sales fell to 104,000 tonnes per day in April, 106,000 tonnes in May and 80,300 tonnes in June. June volumes were 38% below the same month in 2025. Weighted average prices were 37% higher.
The refinery-level losses were great, though. Exchange sales from the Moscow refinery’s delivery points averaged about 4,400 tonnes per day before the June 16-18 attacks. Sales fell to roughly 400 tonnes afterward. Kirishi refinery sales dropped about 80% following its May strike. The Samara refinery group lost about 65%, Norsi lost 63% and Taneco lost 56%.
Simultaneous attacks and consequent outages are causing Moscow extreme distress. Refineries normally cover an outage by redirecting products from another region, drawing down inventories or holding back export cargoes. Simultaneous strikes across Moscow, Nizhny Novgorod, Samara, Tatarstan, Bashkortostan and southern Russia removed those options faster than operators could replace them.
Russian gasoline production fell to about 90,000 tonnes per day in June against summer demand of at least 110,000 tonnes. Other estimates put current production at only 65% of seasonal demand. Domestic gasoline consumption had already absorbed nearly all of Russia’s prewar output: the country produced 41.1 million tonnes in 2024 against annual demand of roughly 36 million tonnes.
Diesel had provided the only cushion here, based on Meduza analysis. Russia produced 81.6 million tonnes of diesel in 2024 against domestic demand of around 51 million tonnes. The resulting export surplus made Russia one of the world’s largest diesel suppliers and gave Moscow room to protect local consumers without abandoning foreign buyers.
That cushion has now disappeared.
Moscow Withdraws One Fuel After Another
First, Russia banned gasoline exports in April because domestic production had little surplus. Next, Moscow banned jet fuel exports on June 1, amid tightening demand, followed by a ban on diesel exports on July 8. The diesel ban now covers oil companies that refine their own crude, removing an earlier exemption that allowed large producers to continue selling abroad.
Russia has begun importing finished fuel from countries that buy its crude. At least 60,000 tonnes of gasoline reportedly arrived from India. Additionally, gasoline shipments from Belarus reached 141,000 tonnes during the first 25 days of June, 2.4 times the volume imported during all of May. Reuters also reported that Russia was seeking to import roughly 400,000 tonnes of gasoline per month from foreign suppliers.
In the meantime, fuel restrictions have spread across most Russian regions. Drivers in Chita reportedly waited as long as 39 hours. Gas stations have closed or limited sales in Krasnodar, Irkutsk, Pskov and other regions, according to Meduza. Some stations reserved fuel for government and emergency vehicles. Teachers in Krasnodar were assigned shifts at filling stations to manage queues.
Moscow also changed the rules governing Russia’s wholesale fuel market. Beginning July 1, large refiners were required to sell only 10% of their gasoline through the St. Petersburg International Mercantile Exchange (SPIMEX), down from the previous 15% mandate. The exchange is the primary wholesale market for independent fuel retailers that lack their own refineries and supply networks. By reducing the mandatory exchange quota, the government allowed vertically integrated producers such as Rosneft, Gazprom Neft and Lukoil to divert more gasoline to their own retail networks, leaving independent stations to compete for fewer exchange volumes at higher prices. According to Meduza, independent operators account for roughly 65% of Russia’s 27,800 gas stations and supply an estimated 30% to 40% of the retail fuel market.
Russian Damage Sets Global Diesel Prices
Russia’s diesel withdrawal has tightened a market already losing product shipments from the Middle East conflict.
European diesel refining margins rose above $60 per barrel after Moscow imposed the export ban, reaching record levels. U.S. diesel futures recorded their largest one-day gain in four years.
Turkey, Brazil, North Africa and Central Asia must replace Russian cargoes with barrels from the United States, India and the Middle East. Those buyers now compete with countries already replacing delayed Gulf products.
Central Asia has already lost significant access. Russian jet fuel deliveries to Central Asia and Afghanistan fell more than 92% between May and June. Gasoline shipments dropped 34%. Russia’s neighboring markets once treated its refineries as their default supplier. They now depend on exemptions granted by a government rationing fuel at home.
Russia could potentially respond by increasing exports of crude oil that domestic refineries are unable to process.
Russia’s refining capacity will eventually recover. Whether it can recover its position as one of the world’s most reliable diesel suppliers is far less certain. Export customers have already begun adapting to a world in which Russian fuel is no longer dependable.
By Julianne Geiger for Oilprice.com
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