Ukraine's drone and missile strikes trigger fuel shortages and inflation pressures in Russia
Ukrainian attacks on Russian energy facilities have caused widespread fuel shortages, prompting emergency measures and raising inflation concerns, while the central bank adopts a cautious stance on interest-rate cuts.
Ukrainian drone and missile strikes on Russian energy infrastructure over the past weeks have sparked acute fuel shortages across two-thirds of the country's 83 regions, affecting both consumers and businesses. In Crimea, authorities have declared a state of emergency and banned all fuel sales, contributing to a collapse in tourism.
President Vladimir Putin acknowledged the problem in a meeting with senior officials, stating that the attacks “create problems, that’s obvious,” but downplayed the severity, saying the deficit was not “critical.”
Analysts note that attacks have targeted refinery units such as catalytic crackers, which are difficult for Russia to replace, prolonging the shortage. Sergey Vakulenko of the Carnegie Institute for International Peace wrote that “the amount of gasoline available in Russia at the moment is determined by a race between Ukrainian drones and Russian repair teams.”
While diesel supplies remain relatively stable, the government may consider extending export bans, which already cover jet fuel and gasoline, to protect domestic availability during the harvest season.
Fuel price hikes are feeding broader inflationary pressures. The Central Bank of Russia warned that recent price surges could have a lasting impact and cited “additional inflationary risks” from unofficial fuel sales at marked-up prices. In June, the bank lowered its key rate by a quarter point to 14.25%, a modest move that drew criticism from Sberbank chief German Gref, who called for faster cuts. Central Bank Governor Elvira Nabiullina rejected faster reductions, warning they could trigger sharp inflation or stagflation.
Both Nabiullina and Gref linked the economic strain directly to the war, emphasizing public concern over the conflict’s continuation. Meanwhile, military spending now accounts for nearly half of the federal budget, and the National Welfare Fund’s liquid assets have fallen to 1.7% of GDP, down from about 7% in early 2022.
