Putin Scrambles for Urgent Oil Supply as Russia Faces Fuel Crisis

Amid ongoing conflicts, Russia faces a significant fuel dilemma

by Zain ul Abedin
Putin Scrambles for Urgent Oil Supply as Russia Faces Fuel Crisis
© Ricardo Ceppi/Getty Images

In a strategic move to mitigate the effects of sustained Ukrainian assaults on its oil infrastructure, Russia has reportedly reached out to Kazakhstan, requesting a considerable reserve of gasoline to stave off potential shortages.

According to sources cited by Reuters, Moscow is seeking the creation of a 100,000-tonne reserve - a volume equivalent to approximately 845,000 barrels - to bolster its fuel supplies as its refineries grapple with the fallout from targeted attacks.

While the specifics of any agreement between Russia and Kazakhstan remain undisclosed, the Kremlin's outreach underscores the severity of the challenge facing Russia's fuel supply chain. Traditionally a net exporter of gasoline, Russia finds itself in an unprecedented position, compelled to import fuel to satisfy domestic demand.

This shift comes in the wake of a series of Ukrainian drone strikes that have critically impaired Russian refining capabilities. The Russian oil industry has sustained significant setbacks, with drone assaults striking refining facilities at least 12 times, including five notable instances in March alone.

These attacks, which have penetrated deep into Russian territory, are part of Ukraine's broader strategy to undermine Russia's wartime economic stability amidst a stalemate on the battlefield. According to the Ministry of Defence, these aerial strikes have rendered more than 10% of Russia's refining capacity inoperative.

Compounding the situation, a major refinery on the Kazakhstan border was recently shuttered due to severe flooding, exacerbating the nation's fuel crisis.

Russia's Fuel Crisis Deepens

In response to these challenges, Russia imposed a six-month export ban on gasoline last month, a measure aimed at stabilizing domestic prices and facilitating the repair of damaged refinery infrastructure.

This follows a similar embargo enacted between September and November of the previous year, from which neighboring ex-Soviet states were exempted. Despite these measures, certain regions within Russia have experienced fuel shortages, accompanied by a surge in gasoline prices.

In 2022, Russia exported 5.8 million tonnes of gasoline, accounting for roughly 13% of its total production. Meanwhile, the Russian government downplays the impact of the Ukrainian attacks on its economy, claiming an increase in oil exports to compensate for the diminished refining output.

Conversely, Kazakhstan has maintained a nearly two-year prohibition on petrol exports to balance its internal supply and demand dynamics. This cautious approach by Kazakhstan highlights the intricate balance of regional fuel supply and geopolitical dynamics as nations navigate the economic repercussions of ongoing conflict.