Russia’s oil cash machine is breaking down. Rosneft just posted a catastrophic 68% profit collapse, with free cash flow plunging 75%. This is the clearest sign yet that Western sanctions combined with Ukrainian strikes are systematically dismantling the Kremlin’s war funding.

The numbers are brutal: net income crashed from 773 billion rubles ($9.68 billion) to just 245 billion ($3.07 billion) in the first half of 2025, while revenue fell 18% despite steady production.

Most telling?

Free cash flow collapsed to just 173 billion rubles ($2.17 billion)—a 75% drop that’s catastrophic for a company that paid out $6.78 billion in dividends and needs billions more for Arctic projects and war funding.

Ukraine’s drone war pays dividends

Rosneft CEO Igor Sechin’s complaints tell the whole story. He blamed “tighter EU and US sanction restrictions” for forcing steeper discounts on Russian crude, while a stronger ruble crushed export earnings.

Even more revealing, Sechin is now publicly griping about the OPEC+ strategy (the cartel of 22 major oil producers, including Russia and Saudi Arabia, that coordinates global production), showing Russia can no longer influence global oil policy from a position of strength.

The man once skeptical of OPEC cooperation is now begging the cartel to prop up prices.

Meanwhile, Ukrainian drone strikes are systematically crippling Russian refining capacity. Depending on sources, up to 17% of Russia’s refining capacity is offline, with some regions introducing fuel rationing and wholesale gasoline prices up 45% despite falling global crude prices.

The strategic validation

For Western policymakers, Rosneft’s collapse validates the slow-squeeze approach.

The company still managed to raise capital spending 10% to 769 billion rubles ($9.63 billion), focusing on remote Arctic projects like Vostok Oil that won’t deliver volumes for years. But it’s paying 2024 dividends of 542 billion rubles ($6.78 billion)—more than triple this year’s actual cash generation.

That math doesn’t work long-term.

Watch these numbers

Two metrics matter most: Russian crude discounts to Brent prices and USD/RUB exchange rates. Small moves in either can swing Russia’s oil revenues by billions.

Rosneft now budgets conservatively at $45/barrel oil—signaling Moscow expects prices and sanctions pressure to persist. Combined with Ukrainian infrastructure strikes and Western financial restrictions, Russia’s oil empire faces its toughest test since the Soviet collapse.

The takeaway for global energy markets: economic warfare is working—slowly and systematically.

In the aftermath of the 24 August drone strike, the Syzran oil refinery in Russia’s Samara Oblast about 1,000 km from Ukraine is no longer operational due to the destruction of its most critical equipment. Russian Telegram channel Astra, citing sources in the emergency services, reported that the facility lost the AVT-6 primary processing unit, the L-35-6 secondary unit, and the pump station — all essential for continued refinery operations.

 

Core refinery units rendered inoperable

According to Astra, five drones exploded on site on 24 August, three of which directly struck key infrastructure. Five more drones were reportedly shot down on approach. No injuries were reported, as all 240 employees had sheltered during the attack.

Previous strike on Syzran refinery occurred weeks ago

The refinery, owned by Rosneft, is one of Samara Oblast’s largest oil-processing enterprises, producing a wide range of petroleum products and supplying fuel to central Russian oblasts and military units. Following earlier drone strikes on 15 August, the facility had already suffered major damage and had suspended crude oil intake and processing.

The 15 August attack struck the ELOU-AVT-6 unit, designed for desalting and primary crude oil distillation, and also damaged several storage tanks.

Systematic drone campaign deepens energy crisis

The refinery has also been targeted multiple times this year, with incidents in February and March causing fires. 

According to Reuters, Ukrainian drone strikes in August have disabled 17% of Russia’s oil refining capacity.

The situation has contributed to worsening fuel shortages across Russia and occupied Ukrainian territories, particularly in Crimea, Zabaykalsky Krai, Vladivostok, Buryatia, and Primorsky Krai.

Ukraine has disabled 17% of Russia’s oil refining capacity through a wave of recent drone strikes targeting key infrastructure, Reuters reports. The attacks, carried out over the past month, have disrupted fuel processing, sparked gasoline shortages, and hit the core of Moscow’s war economy as Washington seeks to broker a peace deal.

Ukraine strikes 10 refineries, targets export terminals

Reuters calculated that Ukraine’s strikes have taken out 1.1 million barrels per day of Russian oil refining capacity. The drones targeted 10 plants, including Lukoil’s Volgograd refinery and Rosneft’s facility in Ryazan. Other damaged refineries include those in Rostov, Samara, Saratov, and Krasnodar regions.

In addition to oil refineries, Ukrainian drones attacked the Druzhba pipeline and Novatek’s Ust-Luga export terminal and gas processing complex on the Baltic Sea. The fire at the Novoshakhtinsk refinery in Rostov Oblast was still burning as of 25 August, days after being struck by drones.

The Syzran refinery in Samara Oblast was critically affected — key equipment was destroyed, rendering it unable to function. Afipsky in Krasnodar Krai and the facility in Novokuybyshevsk were also hit.

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Fuel shortages hit occupied territories and Russia’s south and far east

Fuel shortages followed in parts of Russian-occupied Ukraine, southern Russia, and the Russian Far East. Moscow had already banned gasoline exports in July due to growing domestic demand.

According to Sergei Vakulenko of the Carnegie Russia Eurasia Center, the damaged plants have lost only part of their output, but even limited disruptions can impact supply. He previously worked for Gazprom Neft.

Russia depends on oil and gas for a quarter of its budget revenues. This year, it raised defense spending by 25%, reaching Cold War–era levels. Despite sanctions, Moscow continues large-scale weapons production. Still, economic growth has slowed, causing concern in the Kremlin.

Ukraine strikes the heart of Russia’s funding machine of war. In August 2025, Ukrainian drone attacks hit Russian refineries, halting at least four major plants and depriving Russia of about a seventh of its refining capacity, The Moscow Times reports.

Drones paralyze key refineries

• On 2 August, a UAV strike stopped Novokuibyshevsk Refinery of Rosneft with a capacity of 8.3 million tons per year.
• On 11 August, the Saratov Refinery, producing 5.8 million tons of oil was hit.
• On 15 August, drones paralyzed Volgograd Refinery of Lukoil, generating 14.8 million tons of oil and Samara Refinery of Rosneft, which brings 8.5 million tons of oil.

Additionally, half of Ryazan Refinery’s capacity of Rosneft, which produced 6.9 million tons of oil was halted on 2 August. Over three weeks, Russian refineries lost 44.3 million tons of annual capacity—about 13.5% of the country’s total.

Sanctions complicate repairs

Repairs at Ryazan and Novokuibyshevsk refineries will take around a month. Samara Refinery is expected to remain offline at least until the end of August. Energy Minister Sergey Tsivilyov has explained that EU sanctions have delayed delivery of necessary equipment.

“For example, a four-month repair was planned, but some equipment was delayed or not delivered,” he said.

Gasoline prices hit record highs

Due to the lack of refined oil, Russia is facing a new gasoline shortage. Prices for A-92 and A-95 fuels have risen 40% and 50% respectively since the start of the year, reaching historical records of 71,970 and 81,337 rubles per ton. Analysis shows that Ukraine’s drone strikes not only hit Russia’s economy but also undermine the Kremlin’s ability to finance its war machine. Earlier, Euromaidan Press reported that the Druzba pipeline, Russia’s key oil export artery to Europe, fully halted operations following a Ukrainian drone strike that disabled a key pumping station. The Ukrainian General Staff officially confirmed the pipeline’s shutdown, marking a major blow to Russia’s fuel exports, and a hard cutoff for its EU clients, including Hungary and Slovakia.

Overnight on 15 August, drones struck the Rosneft-owned oil refinery in Syzran, Samara Oblast, sparking large fires at the facility. Located about 800 km from the front line, the plant is a major fuel supplier for both civilian needs and Russian military forces. The attack prompted emergency measures, including airspace closures and restrictions on mobile internet access across the region.

Explosions before dawn ignite major blaze

Media reports and social media posts, including videos shared by the Ukrainian Telegram channel Exilenova+, showed multiple fires and heavy smoke rising from the refinery after the strike. Residents said the first explosions occurred around 04:00, with at least ten blasts heard in total. The footage captured several points of fire and dense black smoke billowing over the complex.

Authorities impose emergency plan “Kovyor”

Samara Oblast governor Vyacheslav Fedorishchev claimed that Russian forces destroyed 13 drones and did not confirm any damage to the facility. He announced that the “Kovyor” emergency plan had been activated, grounding aircraft and closing airspace, and that mobile internet restrictions were in place “for public safety.” Residents, however, reported ongoing fires at the refinery.

Strategic fuel hub hit again

The Syzran refinery processes about 8.9 million tons of crude oil annually, producing gasoline, diesel, jet fuel, and bitumen. It supplies fuel to Samara, Saratov, and Penza oblasts, parts of central Russia, as well as airfields and military units of the Central and Southern Military Districts. Damaging the facility disrupts fuel deliveries to Russian occupation forces.

The plant has been attacked before. Ukrainian drones also struck it in February and March this year, causing fires then as well.