(MOSCOW) – Ukraine struck two more oil refineries in Russia overnight, adding to a growing campaign that is causing significant economic damage to the Russian Federation, according to a new assessment by the Wall Street Journal.
The long term effects of Ukraine’s drone campaign are becoming increasingly apparent across multiple sectors of the Russian economy. The Wall Street Journal’s analysis breaks down the damage across energy, gas prices, e-commerce, agriculture, and aviation.
In the energy sector, the most damaging aspect has been the targeting of oil refineries, which led to fuel shortages and rationing measures over the summer. Russia’s refinery industry processed 3.8 million barrels of oil a day in August, a sharp drop from the 5 million barrels a day handled the same month last year.
To ease the crisis, Russia began importing petrol from as far away as India, an ironic move for one of the world’s biggest crude producers. Moscow also loosened fuel quality standards to allow more supplies from second tier Soviet built refineries and banned diesel exports.
The lower tier refined fuel may cause long term damage to vehicle engines. While short term access to fuel may improve, the use of lesser quality products could completely ruin engines over time.
According to official Russian government statistics, the price of gas is up 19% this year and recently resumed climbing after a dip in August. The dip appears to have resulted from increased imports and a temporary shutdown of exports.
Ukraine’s strikes on logistics facilities have caused more than $10 billion in damage to infrastructure and goods, approximately £7.9 billion, and will result in at least $12 billion in lost sales over the next 12 months, approximately £9.5 billion, according to Moscow based firm Data Insight.
These facilities are not merely damaged. When the aftermath is examined, the buildings are gone and anything inside is destroyed or significantly damaged.
Agriculture has also been severely impacted. Starting in July, Ukraine effectively shut down the main corridor for Russian exports of wheat, barley, and other crops with a series of strikes on export terminals and cargo vessels in the Black Sea and the Sea of Azov. Russian wheat exports fell more than 50% in August from the same month last year, sinking to their lowest level since 2010.
The managing director of SovEcon described the situation as “an unprecedented scenario” and predicted a wave of farm bankruptcies in Russia in the coming months. Farmers operate on razor thin margins and cannot sustain a 50% drop in exports. When farms go out of business, the remaining producers must meet demand, creating long term instability in the sector.
The aviation industry is also taking a hit. Airlines routinely shut down for hours at a time when drones are detected nearby, forcing flight delays and cancellations. There were 993 airport closures across Russia in August, a fivefold jump from half a year earlier. Some analysts dispute this figure, suggesting 150 closures during August is more accurate. Either way, any airport closures represent significant disruption.
President Zelenskyy has warned airlines and countries around the world to stop flying in and out of Russia, stating it is not safe. This warning was misinterpreted by some in Russia as a threat to shoot down civilian airliners. No such threat was ever made.
Be First to Comment