In the summer of 2025, a wave of Ukrainian drone strikes on Russian oil infrastructure has sent shockwaves through global energy markets, highlighting the deep vulnerabilities of critical supply chains in times of conflict. The repercussions, felt from Moscow to the Asian petrochemical hubs, have not only rattled commodity traders and policymakers but have also left Russian consumers grappling with record-high gasoline prices and fuel shortages, despite government efforts to stabilize the situation.
The escalation began in earnest in January 2024, when a fire—attributed to a Ukrainian drone strike—erupted at Novatek’s Ust-Luga terminal, a major Russian facility that processes and exports oil products. According to AInvest, the terminal handles 7 million metric tons of gas condensate each year, converting it into naphtha, jet fuel, and distillates. Novatek, Russia’s largest independent natural gas producer, estimated that full operations would resume within weeks or months. But the immediate fallout was unmistakable: Asian markets, heavily reliant on Russian naphtha, experienced sudden volatility as Novatek was forced to reroute exports through less efficient terminals like Sabetta. That meant higher transportation costs, reduced export values, and squeezed refining margins—a trifecta of headaches for market participants.
But if January’s Ust-Luga fire served as a warning shot, the events of August 2025 made clear that Ukraine’s campaign against Russia’s energy infrastructure was only accelerating. According to CNN, Ukrainian drones targeted at least ten key Russian energy facilities in August alone, including refineries, pumping stations, and fuel trains. The attacks were not just symbolic; the refineries hit account for more than 44 million tons of products annually, representing over 10% of Russia’s refining capacity. Among the most notable strikes was the giant Lukoil refinery in Volgograd—attacked twice within a week—as well as a major refinery in Saratov and another in the Rostov region, where fires burned for more than two days after the initial assault.
The impact on the Russian domestic market was swift and severe. Gasoline shortages were reported in several regions and in annexed Crimea. Sergey Aksyonov, the Russia-appointed governor of Crimea, attributed the shortages to "logistics issues," assuring the public that the government was "taking all possible measures to purchase the necessary volumes of fuel and stabilize prices." Yet, despite these reassurances and a government-imposed ban on petrol exports since late July, wholesale petrol prices on the St Petersburg exchange surged nearly 10% in August and a staggering 50% since the start of the year. Russian consumers, especially those in the far east, felt the pinch at the pump as the price increases trickled down from the wholesale market.
Behind the scenes, Ukraine’s strategy was clear: disrupt Russia’s war machine and daily life by targeting its energy lifelines. The Ukrainian military and intelligence services have honed their long-range warfare capabilities, using drones, missiles, and sabotage to strike deep inside Russian territory. In 2025, Ukraine claimed its long-range attacks caused $74 billion in damage, with nearly 40% of strikes at least 500 kilometers inside Russia. While such figures are difficult to independently verify, visual evidence of fires and destruction at refineries, storage tanks, and pumping stations has become commonplace in recent months.
Repairing this battered infrastructure is no easy feat for Russia. As CNN notes, Western sanctions complicate the acquisition of spare parts and technology, forcing Russian companies to turn to Belarus for emergency petroleum supplies. The Belarusian state-owned refiner, Belneftekhim, reported a surge in Russian demand for its oil products in August, underscoring the depth of Russia’s predicament.
Meanwhile, the Kremlin’s attempt to stem the tide by banning petrol exports has backfired somewhat, leading to an uptick in crude oil exports instead. Analysts predict little relief for Russian consumers in the near term. Sergey Frolov, managing partner at NEFT Research, told the Russian newspaper Kommersant, “Unfortunately, our forecast is unfavorable for now — we will most likely have to wait at least another month for prices to fall.” Kommersant attributed the recent price surge to “accidents at oil refineries.” The military, for its part, has been less affected by these disruptions, as its primary fuel—diesel—remains in better supply.
Ukraine’s campaign has not been limited to traditional refineries. In mid-August, Ukrainian drones struck the Druzhba pipeline, a vital artery supplying Russian oil to Hungary and Slovakia—two EU countries that have maintained relatively cordial relations with Moscow. The attacks prompted sharp complaints from both governments to the EU, with officials arguing that “with these attacks Ukraine is not primarily hurting Russia, but Hungary and Slovakia.” Even former US President Donald Trump reportedly intervened, expressing his anger over the disruption in a hand-written note to Hungarian Prime Minister Viktor Orban.
For Ukraine, these attacks serve a dual purpose: undermining Russia’s economic narrative of inevitable victory and providing a means to counterbalance losses on the frontlines. The unveiling of the domestically produced Flamingo cruise missile in August 2025 marked a new chapter in this campaign. Designed to be produced at a rate of 200 per month, the Flamingo boasts a lethal radius of more than 38 meters and carries a 1,150-kilogram warhead. As missile expert Fabian Hoffman explained to CNN, such a weapon could inflict substantial damage on soft targets like refinery distillation columns. Mick Ryan, author of the blog Futura Doctrina, added, “Each missile that successfully hits its target will cause much more damage [than existing Ukrainian weapons] with its 1,150-kilogram warhead. While I would not call it a silver bullet, it will have a significant impact on Ukraine’s capacity to hurt Russia.”
Global energy markets have responded with characteristic volatility. While Brent crude prices dipped to $78.33 per barrel in early January 2024 amid broader concerns about weak demand, naphtha and distillate markets—particularly in Asia—have experienced sharper swings. The VIX volatility index has shown elevated readings into 2025, reflecting ongoing uncertainty as geopolitical tensions and supply chain disruptions persist. For investors, the situation has underscored the importance of hedging strategies, diversified portfolios, and close monitoring of shifting trade dynamics, especially as Russia’s energy partnership with China grows increasingly transactional. China now accounts for 73% of Russia’s fossil fuel exports, but its reluctance to fund major infrastructure projects like the shelved Moscow-Kazan high-speed rail suggests limits to the alliance.
As the Kremlin braces for a protracted crisis—likely extending the petrol export ban into autumn and scrambling to secure alternative supplies—analysts do not expect thousands of Russian gas stations to run dry. Still, the disruption is aggravating already high inflation and fueling public frustration. The road ahead for Russia’s energy sector, and for global markets more broadly, will be shaped by the ongoing interplay of geopolitical risk, technological innovation, and the relentless search for resilience in a fractured world.
In times like these, adaptability and foresight are proving more valuable than ever for those navigating the unpredictable currents of the global energy landscape.
