Russia’s war in Ukraine is exerting a growing influence on global fuel markets, with Ukrainian drone strikes on Russian refineries helping to drive diesel prices to record levels in the United States.
The average US diesel price reached $5.85 a gallon on Friday, surpassing the previous high recorded in June 2022. Petrol also hit a record for the Labor Day holiday weekend, averaging about $4.14 to $4.15 a gallon.
The immediate focus in energy markets has been the conflict involving Iran and the disruption to shipping through the Strait of Hormuz. But analysts say the longer-running damage to Russia’s refining industry is adding a separate and increasingly serious strain to supplies of refined fuel.
Ukraine’s campaign of long-range drone attacks has repeatedly targeted Russian oil installations. About 40 per cent of Russia’s refining capacity is estimated to be offline, while Moscow has restricted diesel exports in an effort to protect domestic supplies.
Russia’s government announced in July that restrictions on exports of petrol, diesel, marine fuel and gasoil would run until January 31, 2027, although exemptions were introduced for some diesel shipments by producers from September 1.
The reduction in Russian exports is equivalent to roughly 3 per cent of daily global diesel supplies, according to estimates cited by energy analysts. That has compounded refinery outages in the Middle East and production cuts in China, where some plants have been mothballed as crude imports fall.
“The Russia situation is really critical,” said Matt Reed, president of the geopolitical and energy consultancy Foreign Reports.
“It makes sense that the world’s attention turned to Hormuz since the closure triggered the largest supply shock in history. Yet the real story now is refining constraints that are keeping fuel prices high. When the strait shut, the world tapped crude stocks, but we don’t have the same kind of cushion for refined products.”
Unlike crude oil, which can be released from strategic reserves, there is no comparable international stockpile of diesel, petrol or other finished fuels. The United States has drawn its Strategic Petroleum Reserve down to its lowest level in 44 years, but that reserve contains crude rather than ready-to-use diesel.
“In 2026, we learned that the global oil market is surprisingly resilient while the refining ecosystem is extremely fragile,” Reed said.
Ukraine’s refinery campaign
Russian fuel shortages have become increasingly visible inside the country, with queues reported at petrol stations and repeated disruption to major processing facilities.
The Associated Press reported that more than 43,300 Ukrainian drones were intercepted over Russia and occupied Crimea during June, July and August, according to figures compiled from the Russian Defence Ministry. That compared with about 7,700 during the same period a year earlier, although the number of drones that reached their targets could not be independently established.
In August, Ukrainian officials said a strike had hit the Gazprom Neftekhim Salavat refinery and petrochemical complex in Bashkortostan, one of Russia’s largest facilities. The plant has the capacity to process up to 74 million barrels of oil a year and produces diesel, petrol and other fuels.
A separate refinery in Orsk, which was also hit, suspended operations after what a regional governor described as damage to key infrastructure. Repairs could take up to six months, he said, partly because sanctions have restricted access to foreign equipment.
Russia has sought to compensate for the loss of domestic production by refining some oil in Kazakhstan and importing petrol. Those measures have further tightened supplies available to international buyers.
Gregory Brew, a senior energy analyst at the Eurasia Group, said the success of the Ukrainian attacks appeared to reflect a weakening of Russia’s air defences.
“What’s changed is how much success they’ve had at hitting their targets,” he said. “That suggests that Russian air defences have been slowly whittled down. The Russians can’t shoot down Ukrainian drones and missiles with the same kind of effectiveness of a year ago.”
The attacks have also reached facilities around Moscow, increasing pressure on the Kremlin to protect infrastructure far from the front line.
Why diesel prices matter
Diesel is central to the movement of goods. It powers lorries, trains, farm machinery and fishing vessels, meaning price rises feed into the cost of food, deliveries, construction and manufacturing.
Patrick De Haan, head of petroleum analysis at GasBuddy, said the consequences extended well beyond motorists.
“Diesel is the fuel that moves the economy and, when diesel prices reach record levels, the impact extends far beyond the transportation sector,” he said. “Higher diesel prices impact consumers as rising supply chain costs increase the price of groceries, household goods, deliveries, and countless other products Americans rely on every day.”
North American refineries have increased production to help offset shortages, but the industry is entering a period when plants traditionally reduce output for maintenance and switch to winter fuel blends.
Some operators are expected to delay planned maintenance, while others, including refineries in Canada and along the US Gulf Coast, are still due to cut production. That could place further pressure on diesel markets from the middle of September through November.
“That’s going to put even more pressure on product prices in the U.S.,” Brew said. “And that’s likely to come in mid-September and it’s going to last through November.”
The war has disrupted oil terminals, pipelines, tankers and offshore infrastructure across Russia, Ukraine and the Black Sea region. Crude and natural gas markets have generally managed to absorb those interruptions, helped by stockpiles and alternative supplies.
Refineries, however, are large and difficult to replace. Damage to one can remove substantial volumes of fuel from the market for months, particularly when other facilities are already operating at full capacity.
“We’re seeing increasing tightness for refined products,” Brew said. “Diesel in particular is going up across the board in lots of different markets and that is, to a great extent, downstream of what Ukraine has been doing against Russia.”
The pressure creates a further risk for the conflict itself. If Russia struggles to restore its energy infrastructure and maintain supplies at home, the Kremlin could face increased economic and political pressure.
“How does Russia respond?” Brew said. “If they’re seeing their domestic energy infrastructure slowly disintegrate, will that compel Putin to escalate the war to shift the balance more in his favor? I think that’s a real risk.”
