Ukraine's drones are striking weak spots in Russia's war economy

Members of the Russian emergencies ministry work to extinguish fire at an oil storage tank after an alleged drone attack in the town of Azov in the southern region of Rostov, Russia, on June 18, 2024. ReutersShow less

“Greetings from the Birds of the Unmanned Systems Forces,” said Ukraine’s drone leader in August, Robert Brovdi, after attacks on Russian oil infrastructure.

Over the past two months, Ukraine has intensified its campaign against its enemy’s oil refineries, hitting 21 of its 38 large plants. On Friday, a drone struck the Orsk refinery on the Kazakh border more than 1,500km from Ukraine.

Why is Ukraine launching such attacks? Will they seriously hamper Russia’s war economy or its ability to fight? And what might Kyiv do next?

Stalemate on the front lines in eastern Ukraine has led both sides to seek other ways to wage war. Russia, for its part, has conducted its largest drone and missile assault ever on Ukraine’s gas sites on Friday, trying to cut off power and heating as winter approaches.

About 80 per cent of Ukraine’s long-range weapon strikes on Russia have attacked petroleum sites. Kyiv has clearly identified this as its adversary’s key vulnerability.

Attacking refineries is one way to harm Russia’s economy. They are large, vulnerable, explosive targets, but are usually away from urban areas, thus minimising civilian casualties. This is in sharp contrast to Russia’s incessant attacks on Ukrainian cities. They supply fuel to Russia’s armed forces, so they are arguably a legitimate military target. Blowing up refineries does not directly stop Russian oil flows, which could cause world prices to rise sharply and diminish European and American support.

Refineries not only supply Russia’s domestic market, but also account for a large part of its oil exports. It has only three main customers for its crude now, China, India and Turkey. In contrast, exports of products such as diesel and petrol can be marketed much more widely, in smaller quantities, and blended or laundered with other countries’ products to disguise the origin.

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Ukraine waged a similar drone campaign starting in April last year. That caused damage but no serious or lengthy interruptions to Russian refining or fuel supply. It mostly hit the Rostov and Krasnodar refineries in southern Russia, relatively close to Ukrainian-controlled territory.

Now Kyiv’s drones are gaining in numbers, range and payload. As well as the latest mission against Orsk, they have struck refinery and petrochemical targets as far as 1,500km away, in the Perm region in the Urals, and 2,000km distant in the far northern Komi Republic. Russia’s defensive measures do not seem to be keeping up.

This year’s offensive started in August, during the harvest and holiday season, when fuel consumption rises. Drone sightings around Russian airports have closed them down on occasion, sending more people into cars for their holidays.

Estimates suggest that 38 per cent of primary refinery capacity could be offline, and that petrol and diesel capacity has fallen 24 per cent from July to September. Fuel shortages have been reported across Russia, particularly in the Far East, and in the occupied Crimea region.

These numbers should be taken with caution, as noted by Sergey Vakulenko, formerly a senior executive at state oil major Gazprom Neft. They imply that every refinery attacked has been put out of operation, at least temporarily. Russia had about 22 per cent spare refining capacity before this campaign. Minor damage can be repaired quickly, as it was last year. Russia exports about 55 per cent of its refined products, so these attacks will not necessarily cause lasting domestic shortages, even though they affect local distribution networks.

But repeated attacks will have a cumulative effect, as plants wear out and stocks of spare parts are exhausted. If strikes damage sophisticated components such as the hydrocracker or alkylation unit, they will be expensive and hard to replace, as sanctions hamper access to international technology. Russia’s diversion of skilled technical workers to the front line or to war industries is a further problem.

US President Donald Trump’s imposition of tariffs on India has not dented that country’s purchases of cut-price Russian crude. But the EU now seems finally ready to shut off oil imports through the Druzhba pipeline, which serves two pro-Kremlin EU states, Slovakia and Hungary.

Last week, the French navy boarded a tanker, part of the Russian “shadow fleet”, suspected of launching drones that disrupted airport operations in Denmark. The shaky insurance and technical condition of the shadow fleet could give Europe further incentive to clamp down on its passage through the narrow Baltic straits.

There have also been hints of a new approach by Kyiv. On August 12 and 21 and September 7, drones struck pumping stations on the Druzhba pipeline in the Bryansk region. August 24 saw about 10 drones hit gas-condensate storage at the Baltic port of Ust-Luga, near St Petersburg. On September 25, the office of the Caspian Pipeline Consortium in Novorossiysk was hit. Loading at the crucial Black Sea oil port was temporarily halted, although the office building is nearly 13km from the terminal.

The drone strikes have clearly been a tactical success. Rising fuel prices, up 40 per cent for wholesale since January, and long fuel queues, might combine with the futility of the campaign, and economic problems such as high inflation, to stoke public discontent.

But it will take a lot more for them to damage the Russian economy seriously, change the political calculus or undermine Moscow’s military effort. Ukraine also receives significant amounts of its diesel from refineries in Hungary and Slovakia served by the Druzhba line. Its drones will no doubt continue to improve, but Russia may devise effective countermeasures, or shift refining to more distant sites in its vast expanse. Finally, as shown on Friday, Russia will retaliate less discriminately against Ukrainian energy sites.

Still, Houthi fighters in Yemen have shown how effective quite simple weapons can be in halting maritime passage. The US is now considering providing long-range Tomahawk missiles, which have the range to hit Moscow and a much larger warhead than Ukrainian drones. Kyiv in August began using a similar domestically-made model, named Flamingo.

If Kyiv’s situation grows more urgent, or if western support falters, it could strike more aggressively against pipelines, ports such as Novorossiysk, or even shipping. The Black Sea carries about 1.8 million barrels per day, a third of oil exports from western Russia, the Baltic accounting for nearly all the rest.

If falling exports combine with a sharp drop in oil prices as the rest of the Opec+ group increases production, Moscow’s economy would bleed. Ukraine’s unmanned birds may have found a Russian Achilles heel.