Gas Supply Challenges in Russia Amid Ukrainian Drone Strikes

Recent Ukrainian drone attacks on refineries and oil infrastructure have left some areas in Russia facing fuel shortages. Drivers are experiencing long waits at gas stations, while authorities have been forced to halt sales in certain regions.

Wholesale prices for the A-95 gas in St. Petersburg hit record highs last week, rising nearly 50% compared to January prices.

Reports from Russian media indicate that fuel shortages are impacting various parts of the Far East and Crimea, which was annexed from Ukraine in 2014. In regions like North Korea and Primorye, locals are finding gas prices at around 78 rubles per liter (roughly $3.58 per gallon). Some have resorted to selling fuel online for 220 rubles per liter (around $10.12 per gallon).

In the Kuril Islands, public gas sales were suspended due to a shortage of A-92 gasoline, while in Crimea, some businesses are only selling fuel to customers holding special coupons or cards.

Typically, August sees a rise in gas prices in Russia, but this year’s situation has been worsened by the ongoing conflict and targeted attacks on Ukrainian oil refineries. These concentrated strikes tend to cause more significant damage and disrupt production.

Ukraine has made previous attempts to attack energy infrastructure, but recent operations seem to have been more effective, focusing on pivotal facilities. The strikes are occurring along a route of refineries stretching from Riazan to Volgograd, which is essential for drivers heading to the Black Sea.

From August 2 to August 24, Ukraine reportedly targeted Russian oil infrastructure at least 12 times, with many of those strikes aimed specifically at the Riazan-Volgograd area.

Although these attacks have damaged several refineries, they haven’t completely incapacitated them. Most facilities have shown resilience against such disruptions, according to industry experts.

However, these strikes have led to reduced refining capacity, shifting the production of crude oil to about 200,000-250,000 barrels into various products, including diesel and gasoline. This decline has been significant, with gasoline production dropping by 8.6% in early August compared to the previous year, and diesel production falling by 10.3%.

Other war-related challenges have compounded the situation. The drone strikes have disrupted transport networks, particularly air travel. As more people opt for driving, the demand for gas has surged, further straining supplies.

Inflation has also squeezed profits for suppliers who typically stock up on gasoline during the summer, leading many to hold back this year.

Individually, these challenges haven’t created a widespread crisis in Russia. Yet together, they’ve turned expected price fluctuations into a government concern.

In response to the shortages, authorities decided to suspend gasoline exports on July 28, with plans to maintain these restrictions into September. Government meetings have taken place to discuss the situation with oil company managers.

While officials seem worried, experts note that the gas shortage does not pose a systemic threat. Regions affected tend to rely on fewer refineries, hence shortages are localized.

Moscow has largely avoided the current surge in gasoline prices, benefiting from better access to major refineries. The capital’s refineries, located nearby, mitigate the impacts felt in other regions.

Experts agree that there’s no looming prospect of a complete halt, even in regions more susceptible to disruptions. Most public transport and trucks predominantly run on diesel, which remains in surplus. The military, primarily reliant on diesel, also appears insulated from immediate risks.

However, challenges persist. Refineries producing gasoline for the domestic market also generate diesel and other exportable products, which are crucial for revenue amidst Western sanctions. Observers note that Ukrainian drones are targeting essential refinery equipment, which, if damaged, would impede operations and complicate repairs, especially if foreign parts are needed.

Looking ahead, the gasoline crisis may ease by late September as demand normalizes and routine summer maintenance at refineries wraps up. Nevertheless, this situation underscores the vulnerabilities on the home front that could be exploited further as the conflict continues.