Ukrainian drone strikes disabled Moscow’s Kapotnya refinery, the capital’s largest fuel supplier, in June 2026, taking it offline until at least early 2027 and contributing to a nationwide gasoline production shortfall of approximately 25%. Russia has four potential workarounds: redirecting supplies through alternative inland pipelines, transporting fuel by rail from inland refineries, importing gasoline by sea through western ports, and buying back refined gasoline from India.
Each option carries significant constraints, and at best, some combination may reduce the shortage without fully offsetting it. As Ukraine continues to strike refineries and export infrastructure, the situation is more likely to worsen than improve.
On June 16 and June 18, 2026, Ukraine struck Moscow’s Kapotnya refinery, disabling both primary processing units and halting all crude refining. The June 16 strike destroyed the ELOU-AVT-6 unit, rated at 140,000 barrels per day and accounting for 47% of the plant’s total capacity. The June 18 strike disabled the second primary unit, along with storage tanks, pipelines, and auxiliary equipment. Reuters reported on June 24 that the plant requires at least six months of repairs and will not resume production this year.
The facility supplied approximately 40% of Moscow’s fuel. Together with the strike on Tatneft’s TANECO refinery, the two attacks removed an estimated 600,000 barrels per day of refining capacity from Russia’s total refining output, according to the Carnegie Endowment.
Before the strikes, the remaining 60% of Moscow’s fuel came from refineries in Yaroslavl, Ryazan, and Kstovo. According to Carnegie Russia Eurasia Center senior fellow Sergey Vakulenko, a former Gazprom Neft department head, all three facilities have also come under repeated Ukrainian attack and are operating below normal capacity. The Ryazan refinery alone has been struck 15 times.
Since the invasion began in January 2022, refinery runs fell from nearly 6 million barrels per day to 4.69 million barrels per day by April 2026. As of late June 2026, gasoline production was running approximately 25% below year-earlier levels. The decline has two distinct causes.
Western sanctions cut Russian refineries off from Western spare parts and process control equipment, which the IEA links to specific production declines. Drone strikes drove the acceleration from 2025 onward, with Ukraine hitting ten refineries by August 2025 and disrupting an estimated 1.1 million barrels per day of capacity. Russia also entered the war with roughly 20–22% of its nameplate refining capacity already idle. That excess capacity initially absorbed strike damage without visible output loss. That buffer is now gone.
To compensate, Russia has downgraded fuel quality and introduced rationing. Since autumn 2025, refineries have been permitted to sell Euro-3 grade fuel on the domestic market. Fuel sold under the Euro-5 label can now legally contain up to 150 milligrams of sulfur per kilogram, 15 times the permitted level. The dispensation was extended indefinitely in May 2026. Analysts attribute the downgrade specifically to damage to secondary refining units that produce high-quality fuel. This suggests the strikes have degraded the more complex processing steps, not only raw throughput. A total ban on gasoline exports remains in force through July 31.
Russia’s official retail gasoline price rose 9.8% year-to-date through late June 2026, according to Rosstat data cited by Bloomberg. It was nearly double the official inflation rate of 5.85%. That figure nonetheless understates real gasoline inflation by approximately 35 to 40 percentage points. The government holds pump prices 20 to 30 rubles per liter below actual market cost through subsidies, with the difference absorbed by the state budget rather than passed on to consumers.
As of June 15, the official Rosstat retail price stood at 65.41 rubles per liter for AI-92 and 71.11 rubles for AI-95. By contrast, the actual small-wholesale market price on June 22 was 95 to 105 rubles per liter, the price commercial buyers actually pay. Measured against real market costs rather than the subsidized retail baseline, gasoline inflation runs approximately 45 to 50%.
The subsidies are another cost absorbed by Moscow’s wartime economy. In 2025, before the current wave of refinery strikes, they cost approximately 2.6 trillion rubles ($35.43 billion), roughly half the federal budget deficit.
With gasoline production now running 25% below year-on-year levels and wholesale prices 80 to 90% above the official benchmark, the 2026 subsidy burden is certain to be substantially higher. This compounds an already deteriorating fiscal position. Russia’s Q1 2026 budget deficit reached 4.58 trillion rubles, already exceeding the government’s full-year target of 3.79 trillion rubles before the June strikes.
Russia has four options to compensate for Kapotnya’s loss, each with hard constraints. The first is diverting supply through existing inland pipelines from Yaroslavl, Ryazan, and Kstovo. The infrastructure is in place, but all three refineries have themselves been struck and are running below normal. There is no surplus capacity to redirect.
The second is rail transport from refineries deeper inland in the Urals and Siberia. Russian Railways (RZD) transports 87% of all Russian cargo, including non-pipeline oil, making it the backbone of any inland fuel redistribution. However, the network is under severe strain. Military cargo has been formally prioritized over civilian freight, disrupting commercial traffic.
Approximately 11% of Russian freight wagons are currently unusable because of a maintenance crisis. RZD carries a record debt of approximately $45 to $51 billion, cancels around 200 trains per day because of staff shortages, and has cut its investment program by 40%. The destruction of regional refineries is already forcing the military to procure fuel by rail from distant inland regions, directly competing with civilian supply chains.
Belarus is another option that can serve as a near-term rail source. Rail shipments of gasoline from Belarusian refineries to the Russian market rose nearly 13-fold in the first five months of 2026 compared to the same period in 2025, reaching 270,000 tons, while diesel deliveries tripled to 179,000 tons. However, Belarus’s two refineries cannot sharply increase supplies on demand, as production is allocated under long-term contracts, placing a hard ceiling on how much volume can be redirected to Russia. Small, temporary volumes could also be sourced from Kazakhstan, although Central Asian countries are themselves facing gasoline shortages.
The third option is seaborne gasoline imports, an unprecedented step for a major oil-exporting nation. Russia’s western ports, primarily Ust-Luga and St. Petersburg, are the theoretical entry points. However, Ust-Luga was struck by Ukrainian drones five times between March 22 and March 31 alone.
At least one oil-loading berth was destroyed, and operations were repeatedly suspended. The port that would receive imported fuel is itself an active target. Significant seaborne imports are unlikely this summer because of limited import infrastructure and high delivered costs.
The fourth and most significant emerging option is importing already refined gasoline from India, a consequence of the circular trade loop that has developed since 2022. India became Russia’s largest crude buyer after the invasion, purchasing 1.5 to 2 million barrels per day and reaching a record 2.66 million barrels per day in June 2026. Indian refineries, including those at Vadinar and Jamnagar, where Russian crude volumes rose 36% and 14%, respectively, in May 2026, process that crude and re-export refined petroleum products globally.
Russia could buy that fuel back. To offset the higher cost, Moscow could amend its Tax Code and introduce subsidies for oil companies importing gasoline from abroad, calculated using Indian market prices and shipping costs from Indian ports. One technical complication, however, is that Indian gasoline contains approximately 20% ethanol, roughly double Russia’s current permitted standard of 10%. Russian regulators would need to address this compatibility issue.
China is a source of last resort. It has a fleet of independent refineries with underutilized capacity. The strategy would not involve shipping Chinese fuel directly to Moscow because the distances and transportation costs make that impractical. Instead, Chinese refined products would be delivered to eastern Russia, allowing eastern Russian refineries to divert more of their own output westward. Transportation costs for this route remain high, and no timeline has been established.
The reduction in fuel supplies, combined with the broader economic effects of the war, is increasing the strain on Russia’s ability to continue fighting. Liquid assets in the National Wealth Fund have fallen from 6.5% of GDP at the start of the war to 1.8% as of April 2026. Oil and gas revenues dropped 45% year over year in the first quarter of 2026.
The federal budget deficit reached 5.9 trillion rubles in the first four months of 2026 alone, already eclipsing the total deficit of 2025 and blowing past the government’s planned budget target for the entire year. Russia also faces critical labor shortages as young men are conscripted into the military and many working-age people have left the country. High central bank interest rates, VAT tax increases, stagnating economic growth, and declining reserves add to the pressure. However, there is no indication of when, if ever, Moscow will succumb to economic and logistical pressure and end the war.
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