The true scale of Vladimir Putin’s economic woes have been revealed following Ukraine’s relentless drone blitz on Russia’s critical infrastructure.
The 73-year-old has been getting a taste of his own medicine over the summer, as thousands of Ukrainian drones pour over the border, demolishing e-commerce warehouses, oil refineries, and other key strategic sectors.
Now, new numbers from data analysis firm Energy Aspects, cited by the Wall Street Journal, have laid bare the extent of the damage.
Since 2020, Russia has consistently processed around 5 million barrels of crude oil per day, often rising closer to 6 million. This year, that number has tanked, with August’s output as low as 3.8 million barrels.
According to the Oxford Institute for Energy Studies, earnings from the oil and gas industries make up between 30 and 50 percent of the federal government’s total budget revenues, while the oil and gas sector accounts for around 20 percent of Russia’s GDP.
In August last year, Russia was processing an average of 5 million barrels a day, meaning it has suffered a massive drop of almost 1.2 million barrels in a year.
As a result, it is struggling to get a grip on inflation, which is at around the six percent mark despite a target of four percent.
To mitigate the effects, Putin has opted to import oil and gas from elsewhere. This has included getting it from as far afield as India, while neighbors such as Kazakhstan have stuck to deals to import Russian crude oil, refine it, and then send around 70 percent back to Russia.
“The agreements are that up to 30 percent will remain in Kazakhstan, while the rest will be sent to Russia. I believe these are normal conditions,” Kazakh Energy Minister Yerlan Akkenzhenov told journalists following the signing of the deal.
Russia’s own official numbers put the price of gas up 19 percent this year, the Journal reports. In another coping mechanism, it is understood to have banned diesel exports and loosened fuel-quality standards. This is understood to mean poorer-quality oil from old Soviet refineries is being relied on more heavily.
Meanwhile, throughout the summer, Russians have been forced to wait in long lines at gas stations to fill up their vehicles. Images of this have circulated widely and offered one of the clearest visual indications that Ukraine had successfully drawn Russia’s home front into the war after four years of one-sidedness.
Kyiv has not limited its targets to oil and gas.
Citing news outlet Militarnyi and data from NASA’s FIRMS fire-monitoring system, state-funded Ukrainian news website United 24 Media reported that Kyiv struck an airfield in Taganrog, which specializes in repairing military transport aircraft, on Sunday.
Meanwhile, striking images have flooded the internet, showing thick columns of black smoke from fires at facilities belonging to the country’s largest e-commerce companies, Wildberries and Ozon.
Both have seen sprawling warehouses go up in flames at the hands of Ukraine.
According to Moscow-based data analysis firm Data Insight, the strikes have caused $10 billion in damage, with $12 billion in lost sales expected.
It is having knock-on effects across the wider economy, with state-owned bank VTB suffering a 25-point drop in its share price this year because of the large Wildberries debt it owns.
Still, Putin is insistent that he isn’t fazed. While making a rare acknowledgment that Ukraine’s attacks are having an effect, he said last week that they were “not critical for us” and only amounted to a 1 percent hit to the country’s GDP.
But the disruption is becoming increasingly evident, with thousands of flights canceled because of drones in the airspace. Ukraine has promised that it will only get worse going forward, in a bid to flood the skies above its enemy with so many unmanned weapons that airports will be forced to close completely.
It comes as a U.S. delegation, including President Trump’s son-in-law Jared Kushner and special envoy Steve Witkoff, met with Russia and Ukraine in a bid to broker a peace deal.
Witkoff said he was “encouraged” by the “substantive” talks. However, Ukrainian President Volodymyr Zelensky said he expected the war to continue into the winter.
