By year's end, nearly all of Russia's refining capacity could be wiped out

Mikhail Krutikhin's outlook on Russia's oil and gas sector

According to ХВИЛЯ: Russian oil market analyst Mikhail Krutikhin warns that if Ukraine maintains its current strike intensity, Russia may lose virtually all refining capability by the close of the year, except for a few plants well beyond the Urals. He delivered this forecast during an appearance on Yuri Romanenko's YouTube channel. In European Russia, he estimates, up to 80% of high-octane gasoline production capacity and about 40% of diesel fuel capacity could be knocked out. Aviation kerosene is also in a dangerously tight situation, according to Krutikhin.

Bloomberg analysts put Russia's July crude processing at its lowest level since 2002. By the last ten days of August, fewer than three out of ten service stations across the country had gasoline on hand. The government has now allowed the sale of Euro-2 and Euro-3 fuel, banned since the 2010s, which underscores the depth of the trouble in the fuel market.

Turmoil in the refined products market

Krutikhin also pointed to tankers with refined products from India and Morocco left unloaded near Murmansk. He called imports an 'illusion of salvation' because such gasoline costs twice the domestic price per liter. He projects that oil output next year could fall to between 300 and 350 million tonnes, compared with 540 million tonnes.

If this intensity of strikes continues, by year-end Russia may have no refining capacity besides a few plants far beyond the Urals. Part of road transport, including freight, would grind to a halt. Russia would stop being a major oil power - and no one would pay attention to it anymore. Mikhail Krutikhin

This forecast points to severe strains in Russia's economy, especially its oil and gas complex, and the consequences could be far-reaching. With production falling and imports failing to fill the gap, Moscow risks losing its standing as a key player in global oil markets. Possible fuel supplies from China could ease some of the damage, but that would also reshape economic and political ties between the two countries. For English-speaking observers, this is a reminder that the war's effects now reach deep into Russia's domestic fuel supply.

As the situation intensifies, the impact on Russia's fuel supply becomes increasingly evident, with recent reports indicating that gasoline production has dropped to just 70% of demand following drone strikes. This alarming trend underscores the vulnerabilities in the country's refining capabilities and raises concerns about the future stability of its oil market.