Russia’s Downstream Crisis Ripples Through Global Markets

Russia’s downstream sector is facing an unprecedented crisis after months of relentless Ukrainian drone attacks on its refineries. Nearly half of Russia’s 6.6 million barrels per day of refining capacity — the world’s third-largest downstream fleet — has been knocked off line since late February as Ukrainian drones plunge ever deeper into Russian territory. Moscow has adopted a series of measures to help stabilize the domestic situation, including bans on fuel exports. Those may still fall short, but the impacts of the crisis could have major ripple effects on global oil markets. More than 3.1 million b/d of Russian refining capacity is currently down, with no telling when it could be restored. Russia is one of the world’s top diesel suppliers, but refinery throughput is at a multidecade low. According to sources close to official data, Russian refining runs fell to their lowest levels in more than 20 years in June at just 3.87 million b/d. That helped drag Russian processing rates in the first half of 2026 to nearly 4.8 million b/d, according to Energy Intelligence’s preliminary estimates, down by around 450,000 b/d year on year and 700,000 b/d below typical levels for the six-month period. Drone strikes are to blame: They have hardly slowed since February and are getting more brazen. So far in July, at least four refineries have been hit, including Gazprom Neft’s 420,000 b/d Omsk refinery — the country’s largest, located 2,500 kilometers (1,553 miles) from the Ukrainian border — and Tatneft’s 340,000 b/d Taneco refinery, located 1,200 km from the border. Indeed, Ukrainian drones appear to be getting more accurate and longer range. If these Ukrainian attacks continue, Russia’s full-year refining runs could fall further still, to levels not seen since the early 2000s.