Ukraine’s drone attacks on Russian oil refineries are trying to achieve what Western sanctions couldn’t: grinding down what fuels Russia’s war machine and the backbone of its economy in an echo of the Allies' oil bombing campaign on German assets in World War II.

Since the start of the year, Ukrainian drones have hit around 33 oil assets, mostly refineries, in Russia, OSINT group Liveuamap told the Kyiv Independent. Although Kyiv has not confirmed the exact number, President Volodymyr Zelensky said in June that over 30 oil targets have been hit, some in regions bordering Ukraine near Russian military staging areas and others as deep as 1,500 kilometers into Russia.

Oil refineries, which turn crude oil into products like gasoline and diesel, are the Kremlin’s cash cow. Just last month, Russia earned an estimated $520 million per day from crude exports and oil product sea exports, according to the Center for Research on Energy and Clean Air (CREA).

The viral videos of drones slamming into refineries have boosted morale in Ukraine and undermined the Kremlin. However, the tangible impact may not be as great as Ukraine initially hoped. While oil companies have likely spent tens of millions of dollars repairing facilities, it’s a drop in the ocean compared to their multibillion-dollar turnover.

While Ukraine’s campaign has significantly diminished the volume of Russia’s oil refining, “this has not had a strategic effect on Russia,” a Western official told the Kyiv Independent on condition of anonymity.

"These strikes are primarily aimed at fuel refining installations that are supporting Russian front-line forces rather than the economy as a whole.”

Ukrainian drones can fly greater distances than ever before, putting over half of Russia’s total refining capability in the firing line, which totals around 3.7 million barrels per day, according to a report from the U.K.-based Oxford Institute for Energy Studies (OIES).

Russia claims the strikes make little difference, saying last week that it has improved its air defense. However, the oil sector has classified its production and output data, hinting that the situation could be worse than they are letting on, according to Talya Vatman, Russia, Caspian, and Black Sea Programme Manager at the International Energy Agency (IEA).

“While all statements from Russian oil companies and the Kremlin are in lockstep, saying that there is no impact, this decision looks like a strategic one that could imply that production has been hit,” she told the Kyiv Independent.

According to Vatman, the strike on Sept. 1 at Gazprom Neft’s Moscow oil refinery will “significantly” impede its production capability after a blaze at the Euro+ refining unit forced operations to shut down.

While the campaign has not altered global prices for oil products, Vatman said the attacks could bruise the reliability of Russian oil product imports. In response, traders may turn away from Russia and look for alternative, more stable sources.

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But traders that continue to import cheap Russian crude and oil products are likely “not afraid of the volatility and risks,” according to Sergey Vakulenko, a senior fellow at the Carnegie Russia Eurasia Center and former head of strategy and innovations at Gazprom Neft.

He noted that the effects of the attacks were strongest following a heavy drone campaign by Ukraine in March that targeted 14 refineries. Gasoline production dropped from 850,000 metric tons per month to 770,000 metric tons in April and May, according to CREA. By July, Russia's oil refining had reduced by around 17%, a NATO official told reporters.

Russia has since bounced back from the March attacks and sea exports have steadily risen since May. They are still below the levels in the first four months of the year, likely due to OPEC+ restrictions in summer and an extended government ban on gasoline exports until the end of the year.

“This measure has been taken in the past when the domestic gasoline supply-demand balance has been very tight, and authorities are worried about prices on the domestic market going up," Vatman said.

While sea export volumes have improved, their revenues dropped by 7% month-on-month in August, according to CREA. But the declining revenues are less likely to do with the attacks and more down to sliding global oil prices, according to Vakulenko.

Ultimately, Russia’s oil sector is too big to feel a substantial impact from drone attacks, Vakulenko wrote in a Carnegie report. While drones are cost-effective, they can only carry payloads between 5–50 kilograms; enough to impair sensitive parts of the refineries, like distillation towers, but not enough to wipe it out completely.

The situation could change if the West allows Ukraine to use Western-made long-range missiles on Russian territory. Missiles can carry hundreds of kilograms of explosives, inflicting far more damage, Vakulenko said. Although they are unlikely to be able to destroy multiple oil refinery installations at once, he added.

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Moreover, missiles are pricey, with each one costing over $1 million, and Ukraine is unlikely to use them on assets like oil refineries as it could also be “politically problematic with the West,” Sascha Bruchmann, a visiting fellow at the London-based International Institute for Strategic Studies (ISS), told the Kyiv Independent.

But missiles could wreck Russia’s air defense systems, forcing Russia to relocate the remaining systems away from oil assets and closer to the frontline, he added. This may pave the wave for fleets of drones with higher payloads to penetrate Russia’s airspace undetected, he said.

“Missiles and drones reinforce each other and give commanders more flexibility,” he said.
So far, the attacks have largely concentrated on oil refining rather than exploration and production assets. Ukrainian drones have also hit Russia’s electricity infrastructure, which could also be a target for long-range missiles to cut off Russia’s military and defense industries.

Even if Ukraine manages to take out all the refineries within its reach, Vakulenko says Russia can still cover its military, domestic, and economic needs and could turn to neighboring Belarus to recuperate the losses.

This does not mean Russia’s oil industry is in the clear. Western embargos are beginning to bite, leading to longer export distances and higher transport costs for Russian companies which depletes their profits and subsequently taxes for Russia’s state budget, Petras Katinas, Energy Analyst at CREA, told the Kyiv Independent.

Sanctions are also hindering Russian oil companies' ability to modernize and update their IT systems, which rely on Western technologies. Companies could face operational difficulties and lower inefficiency without access to replacements or updates, causing disruptions in refining and production capabilities, Katinas predicts.

Moscow is also battling with oil companies that are surreptitiously seeking higher profits, Katinas claims. Certain companies are buying gasoline at lower domestic rates and reselling it abroad for more, driving up domestic demand and prices.

Prioritizing premium markets, like China, India, and Turkey, gives higher returns to companies but “undermines the government’s strategy to balance domestic needs with international market pressures,” Katinas said.

“While a complete collapse of the Russian oil sector is unlikely in the short term, it does face substantial risks and challenges that could lead to long-term decline,” he added.