Russian oil refineries earned more in the first half of this year than in the same period a year earlier, even as Ukrainian drone strikes kept a fifth of the country's refining capacity out of action, The Moscow Times reported. Record wholesale prices and fast-growing payments from the federal budget have more than covered what the attacks and the repairs cost. Russian consumers are covering the rest at the pump.

Where the profits come from

Russian refineries earned 938 billion rubles ($11.1 billion) in the first half of 2026, 16.2% more than a year earlier, according to the state statistics service Rosstat. Ukrainian drone strikes have put a fifth of the country's refining capacity out of action.

Two things produced that result, according to Promsvyazbank analyst Yekaterina Krylova: high wholesale prices on the SPIMEX commodity exchange, and a sharp increase in state fuel subsidies.

Wholesale prices took off in March, after the war in the Middle East began: light petroleum products have risen 37% since late February and diesel by a third, with July bringing record exchange prices of 82,600 rubles ($982) per tonne of AI-95 gasoline. Crude got cheaper for the refiners over the same stretch, as the ruble price of Urals oil peaked in spring and fell through the summer while the products made from it kept getting dearer.

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The budget pays the difference, the country pays the bill

Russia's damper mechanism compensates oil companies for selling fuel cheaply at home rather than exporting it, and the payments grow as the gap between domestic and world prices widens.

The Finance Ministry paid out close to 350 billion rubles ($4.2 billion) a month in the second quarter, and 500 billion rubles ($5.9 billion) for July and August together. Krylova expects the subsidies and the prices together to widen net margins by 45% in the third quarter, to 35,000 rubles ($416) per tonne of gasoline.

Russia's retail prices tell the other half of the story. Gasoline has risen 21.2% since January and diesel 18.4%, well above Russian inflation. Budget money lets the majors, which own both the refineries and the filling-station chains, hold their own forecourt prices near inflation. Independent chains have no such cushion: they buy at the higher wholesale prices and sell dearer, which is how Russia has been squeezing them out of the market. For drivers, the crisis has been physical as well as financial, with rationing and dry pumps spreading across dozens of regions.

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What the strikes have cost

Ukrainian drones have been hitting Russian refineries since 2024, and the campaign escalated sharply from August 2025, when strikes deep inside Russia became systematic. Russian refineries disclose none of their losses from it.

Ukraine's General Staff estimated the total damage to the Russian oil industry since August 2025 at $13.5 billion, in a count published in early July. The insurance broker Mains put direct losses to the oil and gas sector from drone strikes last year at more than 100 billion rubles ($1.2 billion), and above a trillion rubles once lost profit and indirect damage are counted.

Long-range Ukrainian drones struck the Ilsky oil refinery in Russia's Krasnodar Krai on July 7, hitting one of the facility's technological workshops, a source in Ukraine's military intelligence (HUR) told the Kyiv Independent.

Located roughly 500 kilometers (311 miles) from Ukrainian-controlled territory, the refinery is among the largest in southern Russia, producing over 6 million tons of fuel annually.

It is involved in the reception, storage, and processing of hydrocarbons and distributes refined products via road and rail. The refinery is part of Russia's military-industrial complex and plays a direct role in supporting Moscow's war effort, the source said.

The Russian regional operational headquarters claimed that "drone debris" fell on the oil refinery.

The strike marks a renewed wave of Ukrainian attacks on Russian oil infrastructure, following a months-long pause since March. On July 1, Ukrainian drones struck the Saratovorgsintez oil refinery in Russia's Saratov Oblast.

Kyiv has targeted dozens of refineries, oil depots, and military-industrial sites since the start of Russia's full-scale invasion in 2022. Winter drone attacks forced at least four Russian refineries to temporarily shut down.

This is the second known strike on the Ilsky refinery. Ukrainian drones, operated by the Security Service (SBU) and Special Operations Forces (SSO), previously targeted the facility on Feb. 17, causing a fire.

Krasnodar Krai, a strategic region along Russia's Black Sea coast, has increasingly come under Ukrainian drone attacks as Kyiv extends the range of its strikes deep into Russian territory.

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The Kyiv IndependentChris York

Ukrainian drones struck the Saratovorgsintez oil refinery in Russia's Saratov Oblast, causing damage to the facility, Ukraine's General Staff reported on July 1.

"An important facility has been hit," the General Staff said via its official Telegram channel.

The Saratovorgsintez refinery and chemical plant, owned by Russian energy giant Lukoil, is located nearly 1,500 kilometers (930 miles) from Ukraine's border in the city of Saratov. The city hosts multiple strategic military and industrial sites.

The refinery was targeted to "reduce the enemy's offensive capabilities," the General Staff wrote.

"The occupiers use the capacity of this refinery to supply fuel and lubricants to Russian military units involved in the armed aggression against Ukraine."

The attack was a joint operation carried out by Ukraine's military intelligence agency (HUR) and other military units, the General Staff said. A fire broke out at the site of the attack and damage to the refinery's technological installations has been confirmed. The full consequences of the strike are still being investigated.

The Kyiv Independent could not verify these claims.

The report is the latest in a series of announcements on July 1 about successful Ukrainian strikes on Russian targets. Earlier in the day, HUR released footage of Ukraine's UJ-26 drones, commonly known as Bober (Beavers), targeting high-value Russian air defenses and a fighter jet in occupied Crimea.

A source in the Security Service of Ukraine (SBU) told the Kyiv Independent that Ukrainian drones struck a major Russian military plant in the city of Izhevsk, over 1,300 kilometers (800 miles) from the front lines.

Ukraine also hit a Russian command post in occupied Donetsk Oblast, according to the General Staff.

Ukraine war latest: Ukrainian drones strike Russian plant 1,300km from border, SBU source says

Key developments on July 1: * ‘With surgical precision’ — Ukrainian drones strike Russian plant 1,300km away, SBU source says * Russian missile strike on Dnipropetrovsk Oblast kills brigade commander, injures 30 people, Zelensky says * Ukrainian forces hit Russian command post in occupied Donetsk Oblast, General Staff says * Zelensky signs ratification of

The Kyiv IndependentThe Kyiv Independent news desk