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Crude goes south, gasoline north—Ukraine’s strikes split Russia’s oil trade
Ukraine’s sustained drone strikes on Russian refineries have reversed the country’s position as a net fuel exporter. Moscow now imports gasoline from as far as India and Morocco while rushing crude oil through the Arctic to reach Asian buyers it can no longer supply with finished fuel. The flows are scaling up—and running on the same sanctioned, EU-listed tankers.
The reversal is tightening global fuel markets. Russia runs the world’s third-largest refining industry, and the combined disruptions have acted to squeeze supply worldwide, with Moscow banning exports of both gasoline and diesel to keep its own pumps supplied.
With refining at a 24-year low, Russia is exporting crude through the Arctic while importing refined fuel from India.
Russian refining falls to its lowest since 2002
Ukrainian drone strikes have driven Russian crude processing to 3.6 million barrels a day in July—its lowest level since 2002 and roughly a third below the seasonal norm, according to EA Analytics data cited by Bloomberg.
Ukraine hit at least 24 of Russia’s 34 largest refineries in some 50 strikes, with five more struck last week and at least two this week. With refining at a 24-year low, Russia is exporting crude through the Arctic while importing refined fuel from India.
Fuel shortages and rationing now affect about 50 million people—a third of Russia’s population. Moscow is subsidizing both the damaged refineries and the imported fuel replacing their output.
Sanctioned tankers take crude toward the North Pole
Seven tankers carrying about six million barrels of crude were heading to Asia through the Northern Sea Route as of 11 August. That volume already amounts to nearly half the approximately 13 million barrels the route carried during the entire 2025 season.
The route cuts two weeks off the voyage to China compared with the Suez Canal, and ice conditions are relatively mild this year, one trader told Reuters.
But speed is only part of the surge. Tankers on the Arctic route bypass European waters, where enforcement has led to inspections and detentions of sanctioned vessels, and Ukraine’s strikes on Black Sea shipping and the Iran–US standoff at Hormuz have narrowed the alternatives.
Vessel-tracking data show the convoy following a route north of the Severnaya Zemlya archipelago rather than through the traditional and more southern Vilkitsky Strait—putting sanctioned oil tankers within 500 nautical miles of the North Pole. Maritime experts said commercial traffic at this scale has never operated that far north.
Russian crude returns home as Indian gasoline
In the opposite direction, gasoline refined from Russian crude at Nayara Energy’s Vadinar refinery in western India is flowing back to Russia through a chain of ship-to-ship handoffs at Egypt’s Damietta Port. At least three cargoes have cycled through the hub since June. The first reached Russia on 5 August.
Bloomberg’s tracking data show the tanker Cyclone loaded 42,000 tons of gasoline at Vadinar on 18 June, transferred the cargo to the Oman-flagged Garnet off Damietta on 6 July, and the Garnet reached Russia in early August. Two more tankers, Varg and Photon, followed the same route in July, with Photon’s cargo handed to the Russian-flagged Talisman on 28–29 July.
All these vessels are under EU sanctions. Garnet and Talisman are also under US sanctions.
Nayara’s refinery, which processes 400,000 barrels a day, is 49% owned by Rosneft. EU sanctions in July 2025 drove away its non-Russian crude suppliers, so the plant switched to processing only Russian oil and now buys and sells through traders—which is how its gasoline reaches Russia without a direct India-to-Russia sale, as Euromaidan Press reported.
The expected September launch of Rosneft’s Vostok Oil project could push more crude through the Northern Sea Route, traders told Reuters. NSR crude shipments fell 4% in 2025. This year’s opening weeks have already matched half the full-season total.
