The scale of the disruption is hard to overstate. By some industry estimates, well over half of Russia’s refining capacity has been knocked offline at various points, slicing millions of barrels a day out of supply.
For four years, the war in Ukraine has felt like a machine stuck in one gear: brutal, grinding, and static. That machine has just lurched forward, and not in Russia’s favour. In a matter of days, Ukraine has landed blows that reach deeper into Russian territory and further into Russian revenue than at any point since the invasion began. The country that once exported fuel across the globe is now scrambling to import it. That single fact says more about where this war is headed than any map of frontline territory ever could.
Ukraine’s drone units, operating far from the trenches of the Donbas, have spent the past month hammering Russian maritime targets. By late July, Ukrainian military sources were claiming more than 200 vessels, such as oil tankers, cargo ships, ferries, and tugboats had been struck in the Black Sea and Sea of Azov. Dozens of vessels tied to Russian oil exports have been hit, effectively squeezing shut a maritime lifeline and tightening the noose around Crimea.
At the same time, drones have been reaching Russian refineries thousands of kilometres from the front, as far as Siberia, hitting the same complex fractionation units over and over. These aren’t easy things to replace. The specialised components at the heart of a refinery often have to be sourced from China, and that can take well over a year.
This is a strategic pivot as much as a tactical one. Striking tankers chokes off the money Russia earns from selling fuel abroad. Striking refineries chokes off the fuel Russia’s own war machine and economy need to function. Together, they form a pincer that doesn’t care about trench lines. Russian air defences, built to intercept missiles around Moscow and St Petersburg, were never designed to stop swarms of cheap drones targeting industrial sites scattered across the country. Private refinery operators are reportedly resorting to improvised wire mesh over their facilities, a strikingly lowtech response to a strikingly high-tech problem.
The scale of the disruption is hard to overstate. By some industry estimates, well over half of Russia’s refining capacity has been knocked offline at various points, slicing millions of barrels a day out of supply. Crude oil prices aren’t really the story here. The real stress shows up in the products people and economies actually run on: petrol, diesel, jet fuel. The premium that traders are paying for diesel in European markets has spiked to levels several times the historical norm. Russia, once one of the world’s largest exporters of refined fuel, has now banned exports altogether and is turning to Kazakhstan and India to keep its own pumps running.
Ukraine hasn’t stopped at energy infrastructure. In recent days its drones have carried the war into an entirely different part of Russian daily life: online shopping. At least seven distribution centres belonging to Wildberries, the retail giant often described as Russia’s answer to Amazon, have been hit across St. Petersburg, the Moscow region, Krasnodar, Stavropol and occupied Crimea. The fires have been large enough to send plumes of smoke visible for miles, and industry estimates put the damage, including stock, at billions of dollars, with repair costs alone reportedly running toward half a billion. Kyiv says the strikes aren’t random. Ukrainian officials argue the warehouses double as distribution points for military gear, from navigation equipment to drone components, making them fair game.
Whatever the precise military logic, the symbolism is hard to miss. Wildberries isn’t some obscure logistics firm. It’s woven into ordinary Russian life to a degree that’s easy to underestimate, run by the country’s richest woman and, together with a rival, reportedly accounting for a meaningful slice of Russian GDP and employment. Small sellers who depend on the platform have been venting online about ruined inventory and disrupted livelihoods. That’s a different kind of pressure than a distant refinery fire: it’s the war showing up in people’s shopping carts, not just their petrol tanks.
None of this is happening in isolation. It’s landing on top of a Russian economy that was already fraying at the edges. Government figures show oil and gas revenue sliding sharply this year compared to last, even with global disruptions elsewhere that might have been expected to work in Moscow’s favour. The Kremlin has responded by pouring money into refining subsidies to keep pump prices from spiralling and to head off public anger, anger that’s already visible in fuel lines stretching half a day long and rationing in some cities.
The result of all this is that Russia’s budget discipline is unravelling. Reserve funds that once cushioned the Kremlin against exactly this kind of shock are reportedly drained. International capital markets are largely closed to Moscow, and even China has balked at letting Russian sovereign bonds trade on its exchanges. That has left domestic banks holding the bag, pressured into financing both the war effort and the government’s growing deficit through short-term lending, a pattern that has reportedly triggered internal warnings about the stability of the banking system itself. Rumours are apparently spreading of possible government moves against personal bank deposits, echoing the trauma many older Russians remember from the collapse of Sovietera savings. Whether or not that fear is justified, the fact that it’s taking hold at all tells you something about the mood.
The financial squeeze is also compounding a manpower problem that’s been building for a while. Russian forces have reportedly thrown enormous numbers of troops into capturing a single, relatively minor town in the Donbas for the better part of a year, with limited success. Estimates of total Russian casualties since the war began now run into the seven figures, with tens of thousands more added every month. Death and injury pay-outs to families are a real budget line item, and one that keeps growing. In the past, enlistment bonuses drew in a wave of recruits at a moment when it looked like Western support for Ukraine might diminish. That wave appears to have passed. Independent reporting from journalists tracking the war from outside Russia suggests recruitment has fallen off sharply, with soldiers complaining about under-strength units and describing new conscripts as unprepared, sometimes pulled from prisons or off the streets and pushed to the front after only the briefest training. The tone in some of these accounts is bleak, less open rebellion than a kind of exhausted dread, the sense that something is building.
That leaves Vladimir Putin with an uncomfortable choice: accept that current mobilisation levels can’t sustain the war, or gamble on a full mobilisation that risks serious domestic backlash. Some observers have drawn comparisons to 1917, when the strain of a different war eventually broke the will of Russian soldiers and the regime behind them. Nobody is predicting a repeat with confidence, but the fact that the comparison is being raised at all is telling.
Russia’s diplomatic hand isn’t looking any stronger. Efforts to split European unity or win over the current U.S. administration haven’t paid off the way Moscow might have hoped, and there’s growing appetite in the U.S. Senate for tougher sanctions targeting anyone still buying Russian oil and gas. The warm rhetoric that once followed high-level talks between Washington and Moscow now reads, to many in Russia, as an empty promise.
None of this guarantees a quick end to the war, of course. Cornered regimes have a well-earned reputation for escalation rather than surrender. But the trajectory matters. If the invasion of Ukraine ends not in a dramatic collapse but in a slow, grinding failure, an economy that can’t fund itself, a military that can’t replace its losses, an energy sector that can’t repair itself fast enough, that outcome would still be enormously consequential. It would be a visible defeat for the model of authoritarian power that Russia and its allies have been trying to sell to the rest of the world. And it would hand Europe something it has lacked for years: a genuine reason for confidence.
Russia isn’t collapsing overnight. But piece by piece, a refinery here, a tanker there, a bank warning, a shrinking pool of recruits, it’s crumbling. And in a war this long, that slow erosion may end up mattering more than any single battle.
*John Dobson is a former British diplomat, who has also worked in UK Prime Minister John Major’s office between 1995 and 1998. He is currently a visiting fellow at the University of Plymouth.
