Attacks
In July, the intensity of strikes against Russian energy facilities was even higher than in June. A total of 17 successful attacks were recorded against 16 different oil refineries. At the same time, there were fewer repeat strikes on the same facilities within the span of several days.
Two waves of attacks on oil refineries can be distinguished. From July 1 to July 14, 11 refineries were attacked. After that, no attacks were observed until July 23. Between July 23 and July 31, another five refineries were attacked. It is known that the second wave of attacks continued into early August.
A total of eight attacks were also recorded against oil depots and oil pumping stations, with two of these facilities being attacked twice. In addition, four attacks were recorded against port oil infrastructure, and at least one more attack failed to reach its target. One attack was carried out against an oil production platform in the Caspian Sea.
One substation and two power plants in Russia’s frontline regions were attacked. Missiles were used in the strikes on the power plants. July also saw the beginning of an active campaign targeting tankers, which will be discussed in greater detail below.
Key Developments
We have identified the following noteworthy developments in July:
Fuel Crisis
Overall, an analysis of available reports indicates that the fuel crisis was at its most acute in early July. This was driven by a combination of several factors:
- A prolonged series of successful strikes against several oil refineries and fuel storage facilities over several consecutive months;
- Panic-driven demand from the public, for whom the threat of gasoline shortages had become a real concern;
- The absence of measures to mitigate the situation;
- Many media reports and eyewitness accounts on social media showing queues at gas stations.
By the second half of the month, the situation appeared to be improving. In our assessment, this was largely a visible effect resulting from several factors:
- The redistribution of petroleum products among Russia’s regions, which ensured a more even distribution of shortages, or more precisely, minimized shortages in Moscow and other major cities, including at the expense of more remote areas;
- The implementation of a package of measures aimed at increasing gasoline production;
- The use of reserve stocks;
- A decline in the prominence of the issue, with gasoline shortages becoming normalized to the point where people were no longer posting videos of queues. Administrative measures restricting the publication of such videos may also have contributed to this effect.
Thus, the situation did indeed ease somewhat; however, it remains far from normal. A reduction in media attention to the problem has also had a certain mitigating effect.
Overall, while conditions have improved to some degree, the situation remains far from normalized. The decline in media interest in the issue has had a noticeable impact as well.
Analysis of Petroleum Product Production
No official data on oil refining volumes or petroleum product output are available. However, these indicators can be estimated using unofficial data and indirect evidence.
Data published by Bloomberg [1] indicate a decline in oil refining volumes both compared with the previous year (by 32.6%) and with the previous month (by 150 thousand barrels per day).
Rail shipments of petroleum products on the Russian Railways network were down 16.2% compared with the previous year[2]. This is a more conservative indicator. Attacks on coastal refineries or refineries located on major rivers (for example, the Volga) would reduce refining volumes but would not affect rail shipments, since transportation from those facilities had originally been organized via waterborne transport. Moreover, the redistribution of petroleum products between Russian regions likely generated additional transportation flows. Therefore, this indicator can be treated as a minimum estimate of the decline in refining activity.
Another qualitative indicator is the ban on diesel fuel exports. Refineries have very limited ability to alter the product mix they produce. Given that diesel exports accounted for approximately 40% of total diesel production in previous years, the export ban suggests that the overall decline in diesel production is roughly equivalent to the former export volume.
Russia does not possess significant diesel storage capacity. As a result, if production substantially exceeds domestic consumption, exports are likely to be resumed relatively quickly, since a lack of storage capacity would itself force refiners to reduce processing volumes.
Diesel demand is more strongly influenced by seasonal factors. In addition to the holiday travel season, the agricultural harvest campaign also boosts consumption. Consequently, diesel demand in July and August is somewhat higher than the annual average.
Therefore, it is highly probable that petroleum production declined by approximately 30-35%. Given that average annual gasoline exports typically account for about 10% of total gasoline production, it can be inferred that the domestic market faces a shortfall in self-supplied gasoline of roughly 20-25%. However, the measures implemented by the authorities have reduced the scale of this deficit.
Measures to Stabilize the Domestic Gasoline Market
The following measures were proposed and discussed as means of stabilizing the domestic fuel market:
- Export restrictions. This is the simplest measure and has been used previously. Its purpose is to increase fuel supply on the domestic market by redirecting volumes that would otherwise be exported. The measure has been implemented and has produced a certain positive effect;
- Lowering fuel quality requirements (allowing the use of Euro-3 and even Euro-2 fuel standards). The objective is to increase the volume of fuel available for the domestic market.
The rationale behind this measure is that, after primary crude oil distillation, refineries do not produce market-ready gasoline, but rather straight-run gasoline, or naphtha. Historically, this product accounted for approximately 10-15% of Russia’s total petroleum product exports. Naphtha was shipped abroad, where it was further processed into commercial gasoline.
This additional processing requires increasing the fuel’s octane rating and removing environmentally harmful impurities. Such upgrading is performed using hydrodesulfurization, isomerization, catalytic reforming, cracking, and other processing units. These installations are technologically complex and expensive. For many Russian refineries, selling naphtha directly was more economically attractive than investing in extensive downstream processing capacity.
Lowering gasoline quality standards makes it possible to use larger quantities of straight-run gasoline. Octane levels can be increased through the use of additives, an approach that has significant, though limited, effectiveness. However, the negative environmental impact remains. There may also be adverse consequences for engine reliability. These effects are largely delayed, and at present they are likely being considered less important than ensuring fuel availability. The measure has been implemented and has produced a certain effect.
- Reducing mandatory petroleum product sales through commodity exchanges. By itself, this measure does not affect the physical balance between fuel supply and demand, and therefore its impact is inherently limited.
When the policy was introduced, proponents argued that reducing mandatory exchange-traded sales would allow refining companies greater flexibility in allocating petroleum products and directing supplies to regions experiencing the most severe shortages. In practice, however, the measure appears largely consistent with the interests of major vertically integrated oil companies.
Russia’s retail fuel market can broadly be divided into two segments: vertically integrated companies that extract crude oil, refine it, and sell petroleum products through their own filling station networks; and smaller independent fuel retailers, ranging from regional chains to individual filling stations. These independent businesses are typically located in remote regions that were not considered sufficiently attractive for acquisition by major companies during the consolidation of the oil industry. Historically, they relied on commodity exchanges as their primary source of petroleum products.
The reduction of exchange sale obligations has likely improved the position of large integrated companies and contributed to fuel supplies in major urban centers, while simultaneously worsening conditions for independent fuel retailers. These negative effects are most likely to be felt in remote regions rather than in large cities, making them less visible to both the authorities and the public.
- Import of petroleum products. The purpose of this measure is to increase fuel supplies to the domestic market.
The government began actively searching for potential suppliers of petroleum products. Deliveries from Belarus increased significantly (discussed in greater detail below). Requests were also made to Kazakhstan, including proposals to process Russian crude oil at Kazakh refineries under toll-processing arrangements. These efforts are unlikely to produce substantial results, as Kazakhstan has no significant spare refining capacity and has itself imported petroleum products in recent years. Nevertheless, this does not preclude the delivery of individual small fuel consignments.
Requests were also directed to other countries, and deliveries of relatively small batches, amounting to approximately 30-40 thousand tons, have already been reported from India, South Korea, and Morocco. Some of these shipments reportedly consisted of diesel fuel. There were also plans to import fuel from Japan, but sanctions regulations prevented the transaction from being completed.
Attention should be paid to supplies from Morocco, which does not possess domestic refining capacity. Most likely, these shipments originated in other countries whose involvement was intentionally kept undisclosed.
- Extension of the dampening mechanism to imports. This is a supporting measure intended to encourage fuel imports.
In Russia, most taxes are collected at the crude oil production stage. As a result, the cost of petroleum products leaving refineries is approximately aligned with global market prices. To maintain lower domestic fuel prices, the government operates a «dampening» mechanism that effectively subsidizes domestic sales.
To create economic incentives for importing relatively expensive foreign petroleum products into the domestic market, this subsidy mechanism was extended to imported petroleum products as well.
- Restrictions on fuel purchases by volume or vehicle registration number. This measure was intended to reduce panic-driven demand.
Restrictions were introduced on the maximum volume that could be purchased during a single refueling transaction. The objective was to ensure minimum fuel availability for the broader population while postponing part of demand in the expectation that market conditions would improve.
In some cases, fuel sales were also restricted according to the first digit of a vehicle’s registration number, with one day allocated to vehicles with even-numbered registrations and the next day to those with odd-numbered registrations. This was introduced because some motorists were visiting fuel stations daily to accumulate fuel reserves.
The measure had a certain effect, although it does not alter the long-term balance between supply and demand.
- Limiting price increases on the commodity exchange. The authorities introduced a decision to cap exchange-traded fuel price increases at no more than 0.01% per day.
The purpose of this measure was to reduce speculative demand in the fuel market. Such an approach could potentially be effective in a situation of only minor shortages. However, in the presence of a substantial physical imbalance between supply and demand, exchange prices cease to reflect the true market-clearing level.
As a result, the exchange effectively loses its primary function, namely price discovery. The Russian government nevertheless chose not to allow the market to determine this equilibrium price, likely operating on the assumption that fuel shortages would be less socially disruptive than a multiple-fold increase in fuel prices.
- Creation of coordination headquarters
The purpose of this measure was to improve information exchange regarding consumption volumes, inventories, and production among market participants, while also facilitating resource redistribution.
The measure appears to have played a useful role, particularly during the initial stages of the crisis.
- Use of fuel reserves. At several meetings at different levels of government, officials stated that reserve stocks had begun to be utilized.
Russia maintains state reserves that include petroleum products; however, the size of these reserves is classified information under Russian law[3]. It is nevertheless possible that reserve stocks were indeed employed during the second half of July.
President Putin referred to data from the Ministry of Energy indicating the availability of 1.7 million tons of gasoline. However, this figure most likely refers to operational inventories held by refineries, fuel depots, and other organizations rather than strategic state reserves.
The fact that these inventories were reported to be only 4% below the previous year’s level suggests that they cannot be reduced significantly for technological and operational reasons. Nevertheless, a portion of these stocks may have been released onto the market.
- Mini-Refineries
The governor of Zabaykalsky Krai proposed the creation of an extensive network of small-scale refineries. The rationale was that a decentralized refining system would be more resilient to attacks than a limited number of large refineries. In practice, however, this proposal is unlikely to be implemented.
First, mini refineries generally perform only primary processing operations, making it impossible to produce high-quality commercial petroleum products. In addition, the resulting products would be more expensive, less environmentally friendly, and more difficult for tax authorities to monitor. Such a network could also facilitate tax avoidance not only in refining but also in oil production, since a larger number of buyers would make it easier to conceal actual production volumes.
Overall, the proposal runs counter to Russia’s long-standing policy of reducing the role of mini refineries. The measure was proposed but has not been implemented.
- Rescheduling maintenance shutdowns.
This measure can provide additional gasoline production during periods of tight market balance by postponing planned refinery maintenance.However, in the absence of information regarding the original maintenance schedules, its effectiveness cannot be reliably assessed.
The initial maintenance program is normally designed to maximize refinery efficiency throughout the year. Revising that schedule may increase production during a specific period, but it will likely reduce overall refining volumes over the course of the year.
Hunt for Tankers
On July 6, two gasoline tankers on route to Crimea were attacked in the Sea of Azov. From that day, Operation “MoLoCHKa” began. The table below presents data on attacks against tankers in the Sea of Azov and the Black Sea.
The attacks continued afterward, although their intensity gradually began to decline.
For the first days of the operation, the names of the attacked tankers are known. All of them are relatively small vessels with a capacity of approximately 5,500-7,000 tons. Most belong to the river-sea class, capable of entering rivers and operating in the Sea of Azov and the Black Sea under favorable weather conditions. Some of these tankers are subject to international sanctions.
The tankers attacked in the Black Sea vary in size. Some are ocean-going vessels used for international oil transportation. The names of several of them are known. Louise 1 and Banda were included in Ukraine’s sanctions lists for transporting Russian oil, although these tankers were not placed on the sanctions lists of the EU, the United States, or the United Kingdom.
There are also reports of attacks on several tankers in the vicinity of Novorossiysk, including vessels at the terminal of the Caspian Pipeline Consortium (CPC) while they were loading oil. The situation surrounding the CPC is examined in more detail below.
Despite the impressive scale of the operation, it should be remembered that being «attacked» does not necessarily mean being «destroyed.» Tankers may sustain damage, which does not always require immediate repairs. However, some vessels lose the ability to move under their own power and drift while awaiting tug assistance. There are confirmed cases of vessels sinking, although these do not involve oil tankers.
Nevertheless, on July 6 there were approximately 130 vessels in the Sea of Azov, whereas by July 18 that number had fallen to 30[4]. Although some of the attacked ships were anchored near ports awaiting loading or unloading, such a reduction clearly complicated the transportation of petroleum products in the Sea of Azov.
According to Bloomberg, during the week of July 19-26 and in subsequent weeks, shipments from the port of Novorossiysk declined from 7-8 tankers per week to 3-4. This suggests that attacks on tankers in the Black Sea led to a reduction in Russian oil exports through Russia’s principal Black Sea port.
The CPC Situation
The Caspian Pipeline Consortium (CPC) is a pipeline system that primarily transports oil from Kazakhstan, produced by international consortia that include major U.S. and EU oil companies. Legally, a portion of the oil carried through the pipeline already belongs to these companies rather than to Kazakhstan. Approximately 10% of the crude transported through this route is Russian oil.
On July 17, the Nordic Zenith tanker, which was on route to load oil from CPC facilities, was attacked. One week earlier, the tanker Yasa Polaris had also reportedly been attacked.
On July 19, two tankers, ASIA and NISSOS IOS, were attacked while receiving crude oil from CPC’s offshore loading buoys. Moreover, ASIAhad been chartered by TengizChevroil, a company that is 50% owned by the U.S. corporation Chevron.[5]
As a result, Kazakhstan announced its intention to seek compensation for damages. However, following these statements, another tanker, NELSA, was attacked, leading CPC to suspend crude loading operations. The tanker NELSA is included in the sanctions lists of numerous jurisdictions, including the United States, the European Union, the United Kingdom, Canada, New Zealand, Australia, and others.
On July 22, another tanker was attacked, while a separate vessel reportedly abandoned its loading operation due to the maneuvers of unmanned surface vessels in the area.
Following discussions between representatives of Chevron and officials in the U.S. presidential administration, U.S. authorities reportedly warned Ukraine against attacking tankers operating in the Black Sea[6].
The suspension of CPC operations, through which up to 80% of Kazakhstan’s oil exports are transported, led to a reduction in Kazakhstan’s oil production by more than half on July 26. Production at the Tengiz field, where Chevron plays a major role, reportedly declined even more sharply.
On July 27, two of CPC’s three offshore loading systems resumed oil exports. However, on July 30, the tanker Nissos Sifnos, chartered by TengizChevroil (Chevron), was attacked, resulting in another suspension of loading operations. Another tanker, MARATHI, was also attacked while approaching the terminal.
It was later reported that on July 31, J.D. Vance spoke with Volodymyr Zelenskyy and requested that no attacks be carried out against CPC facilities or against tankers transporting Kazakh oil[7].
The rationale behind attacks directly affecting CPC operations remains unclear. Approximately 90% of the oil exported through CPC originates in Kazakhstan and is owned largely by Western companies. A reduction in global oil exports generally supports higher oil prices, which could benefit Russia economically. However, it is noteworthy that during the period when CPC operations were disrupted, Kazakhstan’s president Kassym-Jomart Tokayev reportedly told Vladimir Putin of the need to end the war[8].
Another possible factor is geography. CPC facilities are located near the port of Novorossiysk, but outside the main harbor area. Tankers operating there may appear to drone or unmanned vessel operators to be more accessible targets than ships located within the protected waters of Novorossiysk harbor. It is therefore possible that some of these incidents resulted from targeting errors or misidentification by operators.
Belarus
According to the latest available information, Belarus ceased exports of petroleum products to third countries in July and redirected supplies exclusively to the Russian market. In addition, a toll-processing arrangement remains in operation under which Belarus provides refining services without purchasing the crude oil itself. There are grounds to believe that Belarus’s two refineries are currently operating at maximum utilization and, through these two mechanisms combined, can supply up to 300,000 tons of gasoline per month.
During the final week of June, Belarus was supplying AI-92 gasoline at a price of 127,000 rubles per ton (approximately $1,520 per tons), nearly twice the corresponding exchange-traded price in Russia. By July 6, the price of Belarusian gasoline had risen to 142,000 rubles per tonne, while gasoline on the exchange in the European part of Russia was trading at 71,200 rubles per tonne (approximately $1,820 per tons). However, on July 6, the St. Petersburg International Mercantile Exchange (SPIMEX) introduced a limit on daily price increases of no more than 0.01%, including for fuel produced in Belarus[9]. Immediately thereafter, sales of Belarusian gasoline on the exchange fell dramatically. Volumes declined from approximately 7,000 tons traded on July 1-2 to only 420 tons on July 6[10].
Most likely, these fuel volumes were redirected to the over-the-counter (OTC) market. Sales volumes in previous weeks demonstrated that buyers were willing to purchase Belarusian fuel even at elevated prices; the primary change was that supply contracts increasingly began to be concluded directly between counterparties rather than through exchange mechanisms.
This development once again highlights the commercial basis of Belarus’s reorientation of petroleum product exports toward the Russian market.
International Situation
Global oil prices in July declined slightly on average compared with June, falling by approximately $0.5-2.5 per barrel, depending on the crude grade, despite continued tensions surrounding the Strait of Hormuz. At the same time, oil transportation volumes did not return to pre-war levels.
Russian crude oil became significantly cheaper, falling by $4.4 per barrel to $56.3 per barrel. As a result, the discount on Russian oil widened further, reaching $27.7 per barrel, compared with $23.7 per barrel in the previous month.
The persistence of a substantial discount on Russian crude, even during a period of tight global oil markets, highlights the continuing impact of U.S. sanctions policy. During periods when sanctions enforcement was temporarily relaxed, the discount reportedly narrowed to approximately $7 per barrel.
In addition, seaborne volumes of Russian oil remained elevated throughout July, suggesting ongoing difficulties in finding sufficient buyers. Continued accumulation of oil cargo at sea indicates that sales channels remain constrained despite global market demand and generally supportive oil prices.
Oil Production
Russian oil production declined by an additional 41 thousand barrels per day (bpd) in June, reaching 8.88 million bpd. As a result, the decline has returned to the long-term trend characterized by a monthly reduction of approximately 50-70 thousand bpd. The sharp contraction recorded in the previous month did not develop into a new trend; however, there are some indications that the pace of production decline may be accelerating.
At the same time, OPEC+ countries continue to raise their oil production quotas. At the organization’s July meeting, production quotas were increased again by 188 thousand bpd for the group, with the quotas established for September being determined during that meeting. Russia’s quota was increased by 62 thousand bpd.
Russia’s production quota for July had previously been set at 9.824 million bpd. Consequently, actual production fell 937 thousand bpd below the established quota.
Oil and Gas Budget Revenues
Federal budget revenues from the oil and gas sector amounted to 934 billion rubles in July 2026, compared with 683.6 billion rubles in the previous month. However, this increase was attributable to payments of the quarterly Additional Income Tax (AIT). Excluding this tax, revenues would have amounted to 578 billion rubles, representing a 21.4% decline.
The decline in oil prices led to a reduction in revenues from the Mineral Extraction Tax (MET), the main oil-related source of budget revenue, by more than 30%.
This reflects the impact of lower oil prices in June, since taxes on oil production are paid in the following month. Oil prices declined even further in July, and therefore a further reduction in revenues should be expected in August.
The decline in revenues was partially offset by a reduction in payments under the dampening mechanism, which fell from 210 billion rubles to 113 billion rubles, almost a twofold decrease. Lower global oil prices result in reduced payments under the dampening mechanism. Nevertheless, payments under the dampening mechanism continue.
Conclusion
Strikes by the Ukrainian armed forces against Russia’s energy infrastructure continued to intensify. The fuel crisis in Russia worsened; however, the implementation of a number of measures somewhat mitigated the impact of the decline in gasoline production. At the same time, it remains unclear whether the effect of these measures will be sustainable in the long term. Supplies from Belarus have likely already reached their maximum levels. Opportunities for imports from other countries are limited, although some potential remains. The production of commercial-grade gasoline through increased use of additives can significantly expand gasoline supply, but the resulting decline in fuel quality may negatively affect vehicle engine life.
A large-scale operation involving mass strikes against commercial vessels was conducted in the Sea of Azov and the Black Sea. As a result, shipping activity declined significantly, affecting oil export volumes from the port of Novorossiysk.
However, tankers carrying oil from Kazakhstan and chartered by Chevron were also affected by the strikes. This created a degree of political tension among the authorities of Kazakhstan, Ukraine, and the United States.
Russian budget revenues declined by 22% compared with the previous month. Revenues from the principal oil-related tax fell by 30%, while payments under the dampening mechanism were reduced by half.
The price of Russian oil on the global market fell to $56.3 per barrel, while the discount relative to Brent widened to $27.7 per barrel.
Oil production declined by 40 thousand barrels per day, which is consistent with the long-term trend of monthly production decreases. Russia’s total oil output fell to 8.88 million barrels per day, while the volume of unused production quota under the OPEC+ agreement increased to 937 thousand barrels per day.
- [1] https://www.bloomberg.com/news/articles/2026-08-03/ukraine-s-shifting-strikes-deepen-uncertainty-around-russian-oil
- [2] https://ipem.ru/content/pogruzka-na-seti-rzhd-v-iyule-2026-goda-infografika-i-analiz/
- [3] Law of the Russian Federation “On State Secrets” (Article 5, Paragraph 4)
- [4] https://t.me/oko_gora/19937
- [5] https://www.cpc.ru/EN/press/releases/2026/Pages/20260719.aspx
- [6] https://t.me/oilgazKZ/3996
- [7] https://www.ft.com/content/725b4d15-bd8d-4083-a04e-db016338af2e?syn-25a6b1a6=1
- [8] https://www.bbc.com/russian/articles/cn8n08r4993o
- [9] https://www.kommersant.ru/doc/8797660
- [10] https://www.kommersant.ru/doc/8798395
Материал доступен на русском языке: Российская энергетика в июле 2026
