Ukraine hit the Kremlin’s oil revenue — even the price surge due to the Middle East doesn’t save Russia’s budget

The Ukrainian campaign of strikes on Russian oil infrastructure is beginning to change the economics of the war. According to the Institute for the Study of War, strikes on refineries and related facilities are already hindering Russia from taking advantage of the rise in global oil prices caused by tensions in the Middle East.

For Israel, this story is important not only as part of Russia’s war against Ukraine. It is directly connected to the larger regional picture: the Strait of Hormuz, Iran, energy routes, oil prices, and Moscow’s ability to finance aggression through commodity revenues. The more Ukraine hits Russia’s oil system, the less the Kremlin can earn from international crises.

Ukrainian strikes have destabilized major Russian refineries.

According to Reuters, cited by ISW, almost all major refineries in central Russia were forced to either halt operations or sharply reduce production after the latest Ukrainian drone attacks.

This is not about symbolic damage. The strikes hit facilities that provide more than 30% of gasoline production and about 25% of diesel fuel in the Russian Federation. For a country engaged in a protracted war, this is a blow on several fronts: the army, the domestic market, exports, and budget revenues.

One of the most affected facilities is the Kirishi refinery in the Leningrad region. It is one of Russia’s largest plants, capable of processing up to 20 million tons of oil per year. After the Ukrainian strike on the night of May 5, the facility, according to Reuters, completely halted operations.

Why this is more painful than a regular infrastructure attack

Russian oil refining depends not only on pipes, tanks, and manpower. Restoring damaged refineries requires components, technologies, and equipment, access to which is limited by Western sanctions.

That’s why each new strike can have a cumulative effect. A damaged facility cannot be quickly brought back online if the necessary parts, specialists, and logistics are lacking. In peacetime, such a problem would be solved by supplies and services, but under sanctions and war conditions, repair becomes a separate front.

For the Kremlin, this is especially unpleasant now, when it was counting on additional income from rising oil prices amid Middle Eastern instability.

Oil prices are rising, but Russia’s revenues do not save the war

In May, Russia’s revenues from oil and gas sales, according to Reuters forecasts, could grow by 39% year-on-year — to 700 billion rubles, or about 9.8 billion dollars. The reason is clear: escalation in the Middle East raises global oil prices, and such moments previously allowed Moscow to quickly replenish the budget.

But the current picture for Russia is much more complicated.

Compared to April 2026, oil and gas revenues are expected to fall by 17%. And for the period from January to May 2026, energy revenues decreased by about a third — to 3 trillion rubles, or about 42.1 billion dollars.

This means that even a favorable external environment no longer works for Russia as it used to. Ukrainian strikes on oil infrastructure eat away part of the effect of rising prices, and domestic subsidies for the industry and the tax structure further pressure the budget.

NANews — Israel News | Nikk.Agency views this dynamic as an important signal for the Israeli audience: the war in Ukraine, the crisis around Iran, and Middle East energy security are increasingly intertwined into one system. Strikes on Russian oil reduce Moscow’s ability to profit from regional instability and finance further aggression.

The Hormuz factor and Russian calculation

The Kremlin hoped that tensions around the Strait of Hormuz and the Middle East would give it a temporary respite. If oil becomes more expensive, exporters usually receive more foreign exchange earnings, even with restrictions and sanction pressure.

But Ukraine is effectively breaking this calculation.

When refineries are idle, ports and processing operate unstably, and the export system receives regular damage, a high oil price does not automatically turn into net profit. Russia is forced to spend more on repairs, subsidies, logistics, and maintaining the domestic fuel market.

For Israel, this is an important example of how Ukraine’s military resilience affects not only the battlefield but also the strategic economy of opponents of the Western camp.

Russia has started to consume gold — this is a worrying signal for the Kremlin

Amid falling oil revenues, Russia continues to use gold reserves to cover the budget deficit. The Central Bank of the Russian Federation reported the fourth consecutive reduction in gold reserves in April 2026.

As of May 1, the volume of reserves amounted to 73.9 million ounces of gold bars. This is the lowest figure since March 2022.

In April alone, reserves decreased by 200 thousand ounces, and since the beginning of 2026 — by 900 thousand ounces. According to The Moscow Times, citing the World Gold Council, in the first four months of the year, Russia lost 27.9 metric tons of gold. This is the largest reduction in gold reserves since 2002.

What the sale of reserves means

Selling gold does not look like a sign of strength. It is more an indicator that ordinary sources of financing are no longer sufficient.

In November 2025, the Central Bank of the Russian Federation first began selling gold to finance growing military expenses. At the same time, the Kremlin continues to spend liquid funds from the National Wealth Fund on the war against Ukraine.

The longer this model continues, the harder it is for Russia to maintain a balance between the army, social obligations, the ruble exchange rate, and internal economic stability. Bankers are already predicting a possible weakening of the ruble by the end of the year to 80–90 per dollar, and new tax legislation may push the growth of the shadow economy.

Ukrainian strikes on oil infrastructure in this sense become not a one-time tactic, but part of a broader strategy of pressure. They not only damage plants. They reduce Russia’s ability to turn oil, gold, and reserves into resources for continuing the war.

For Israel, there is a practical conclusion here: the war against Ukraine has long gone beyond Ukrainian geography. It affects the energy market, Russia’s behavior, Iran’s calculations, and the security of the entire region. And the less money the Kremlin has for war, the weaker its role as a partner and patron of anti-Western forces.