Ukraine's Long-Distance Drones Take Toll On Russia's Oil Business -- And War Chest

Ukraine's deep-strike drone campaign targeting Russia's oil and gas production facilities has already cost its enemy 10 percent of its refining capacity, according to industry experts -- and Kyiv is committed to stepping things up.

"Ten percent, it's not an astonishing number," says Tatiana Mitrova of Columbia University's Center on Global Energy Policy. "But it is still something that starts to be felt with the Russian domestic fuel crisis, with reduced oil refined products exports, and general tension inside the Russian oil sector."

Ukraine has invested heavily in new long-distance drone technology, putting out weapons such as the Lyutiy drone, which is capable of delivering explosives up to 2,000 kilometers from its secret launch site.

But Ukrainian drone units have also gained expertise at swarming targets with dozens of cheaper first-person-view (FPV) drones.

The technology advances are currently allowing Kyiv to hit key Russian oil and gas resources on an almost daily basis.

It has also committed to hitting the same refineries repeatedly, an essential strategy, says Mitrova, as Russia scrambles to rebuild and repair damage.

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Kyiv has also struck at least half of Russia's 38 major production complexes and has forced Russia to reduce oil processing from 5.4 million barrels per day in July to just 5 million two months later.

Still, Mitrova points out, Russia operates the world's third-largest refining system and has substantial built in surplus capacity.

"It might take years before the result becomes really visible," she says, "so we are not talking about Russian refining collapsing anytime soon -- but exhausting its potential, it really started already."

Russian consumers have felt the pain of gasoline shortages and rationing, while gasoline exports have been banned. In addition, says Mitrova, Russia is now exporting more crude oil and less refined product, which substantially lessens its export revenues.

The importance of fossil fuels to Russia's economy can hardly be overstated, bringing in $100 billion annually. However, that number is roughly 20 percent lower than it was a year ago, say industry analysts at organizations such as the Center for Research on Energy and Clean Air.

The nearly four-year full-scale invasion of Ukraine is funded heavily by Russian gas and oil sales abroad, which have made this sector the subject of growing waves of US and EU sanctions.

But it would be naive to assume that targeting Russian oil and gas, both economically and militarily, is likely to cause noticeable battlefield effects, says Mitrova, who points out the Russian Army is generally first in line when resources are limited.

Nevertheless, Ukrainian President Volodymyr Zelenskyy has said he's a firm believer that hits on Russia's refineries are "the most effective sanctions -- the ones that work the fastest."