Ukrainian forces hit oil refineries in Russia’s Yaroslavl and Leningrad regions after Moscow launched a heavy early-July attack on Kyiv.
The strikes extend a drone campaign against Russian energy infrastructure that has already helped trigger fuel shortages, one of the first wartime disruptions to affect much of Russia’s population.
Russia’s economy was already under strain before the shortages, with VAT raised to 22% in January 2026 and officials warning in June that hard times could last at least three years.
Still, the report says the pressure is unlikely to force Vladimir Putin to retreat: the Kremlin retains tight political control, interest rates have fallen to 14.25% from 21%, and higher oil revenue has offered temporary relief.
The broader outlook remains grim for both sides, with Ukraine reliant on EU support after the US halted funding in 2025 and the war showing little sign of ending soon.
With its economy cracking, can Putin's authoritarian grip outlast Ukraine's drone attrition war?
As Western missiles are diverted to Iran, can Ukraine's drone strategy alone secure victory?
Russian Fuel Crisis Deepens After Ukrainian Drone Strikes: Economic, Social, and Political Impacts, July 2026
Overview
Ukraine has stepped up its drone attacks on Russian oil infrastructure, aiming to disrupt Russia’s energy revenues and put economic and logistical pressure on Moscow. These strikes are intended to force President Vladimir Putin to end the conflict, but the Kremlin remains defiant. Russian officials insist that military pressure will not lead to concessions and warn that escalation could prolong the war. As a result, Russia faces growing fuel shortages and logistical challenges, while the government signals it may respond by expanding its military operations, highlighting the escalating and complex nature of the conflict.