MOSCOW, July 14 — Against this backdrop of sustained Western sanctions and a grinding war of attrition, Russia’s petroleum sector is absorbing a series of punishing blows that are reshaping its fiscal and strategic calculus. Ukrainian drone strikes, now a persistent feature of the conflict, have inflicted measurable damage on the country’s refining capacity, with consequences that ripple through global energy markets. Russia remains the world’s third-largest oil producer, a position built on average output of 10.5 million barrels per day in 2024.
Yet the revenue flowing from that production is in steady decline. According to the Russian Ministry of Finance, oil and gas revenues accounted for roughly 30 percent of the federal budget in 2024.
That share is now under pressure from multiple directions: Western price caps, reduced export volumes, and the direct physical destruction of processing infrastructure.
The refining toll
Ukrainian strikes on Russian refineries in 2024 reduced the country’s total refining capacity by an estimated 10 to 15 percent, according to the International Energy Agency. The IEA’s assessment underscores the vulnerability of a sector that is both a critical source of state revenue and a linchpin of domestic fuel supply. The Taneco refinery, struck on March 23, 2025, processes 360,000 barrels per day — roughly 3.4 percent of Russia’s total refining capacity.
Each such hit compounds the strain on a system already operating under diminished capacity. In Nizhnekamsk, the Sibur petrochemical plant produces polymers and synthetic rubber, with an annual capacity of 600,000 tons.
The facility represents a key node in Russia’s downstream industrial chain, and its exposure to drone attacks adds another layer of risk to the country’s broader energy and chemical export strategy.
Export revenues in freefall
The financial trajectory is stark. Russia’s oil export revenues fell from $191 billion in 2022 to $150 billion in 2023, and further to $127 billion in 2024. The IEA attributes part of this decline to drone strikes and part to the Western price cap mechanism, which has constrained Moscow’s ability to sell crude at market rates.
The March 2025 strikes could further reduce Russia’s ability to process crude oil for domestic use and export, potentially increasing global oil prices as Russian product supply tightens. Export volumes tell a similar story.
The IEA reported that Russian crude oil exports in February 2025 were 7.2 million barrels per day, down from 7.8 million in February 2024. That decline of roughly 600,000 barrels per day in a single year reflects both the cumulative effect of sanctions and the operational disruptions caused by the campaign against refinery infrastructure.
What to watch next
The wider picture is one of a producer that, while still pumping enormous volumes of crude, is increasingly constrained in its ability to turn that crude into usable products and hard currency. The question in the corridors of energy ministries across Europe is whether the attrition against Russian refining capacity will accelerate, further tightening global diesel and gasoline markets. For now, the data points in one direction: a steady erosion of Russia’s position as a reliable energy supplier, with the Kremlin forced to navigate a narrowing set of options for monetising its most valuable resource.
Sources
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