The Kremlin Is Facing A Record Budget Deficit

13.11.2026, 11:42

Ukraine has destroyed one-third of Russia's oil refining capacity.

Ukrainian strikes on Russian oil refineries are having an increasingly severe impact not only on the fuel sector but also on Russia’s entire economy. Damage to refineries, problems with oil exports, and logistical challenges coincide with a rapid rise in the budget deficit and military spending.

At the same time, the Kremlin is attempting to compensate for human losses through a covert mobilization, while attacks on critical infrastructure are exposing new vulnerabilities in the Russian state.

Russian opposition journalist Michael Naki explained “Channel 24” just how damaging Ukraine’s strikes on oil refineries have been for Russia, how they are affecting oil exports, and whether Moscow will be able to continue financing the war amid a budget crisis. The journalist also assessed the scale of Russian casualties, the consequences of the covert mobilization, and the vulnerability of Russia’s critical infrastructure.

The Extent of Destruction in the Oil Refining Industry

The latest attacks by Ukrainian drones on Russian oil refineries have demonstrated unprecedented effectiveness.

According to industry sources, in just a few weeks, Ukraine was able to take out about 30 percent of Russia’s oil refining capacity. Nine of the thirty-five largest refineries in Russia sustained damage.

Among the most significant targets was the port of Ust-Luga in the Leningrad Region, which is a key export hub on the Baltic Sea. A massive fire, visible even from Estonia, indicates serious damage to the oil product transshipment terminals.

In addition, successful strikes were carried out against the Saratov refinery, where thermal and primary oil refining units were hit, as well as against a facility in Kirishi, whose operations were completely halted due to damage to key process units.

The total design capacity of the affected refineries is approximately 300,000 metric tons per day. The actual reduction in crude oil processing volumes could reach 200,000 metric tons per day.

Plummeting Exports and a Logistical Collapse

The consequences of these attacks were immediately reflected in Russian oil exports, which plummeted.

In just one week, shipments fell by 700,000 barrels per day, reaching a three-week low. The gross value of Russian seaborne oil exports fell to a six-week low.

A telling example is the case of a tanker carrying Russian diesel fuel to the U.S.: the vessel turned around several hundred kilometers from New York and began moving away from the American coast, awaiting further instructions.

At the same time, shipments were suspended at the port of Kozmino, where the docks had been idle for several days in a row. A strike on the oil pumping station in Samara—a key hub for export routes to Ust-Luga and Novorossiysk—further complicated logistics.

A Devastating Blow to the Federal Budget

The economic losses from the destruction of infrastructure are compounding the overall crisis in Russian finances.

Russia’s federal budget deficit from January through October totaled 5.2 trillion rubles, which is 38 percent higher than the entire projected deficit for the current year. Despite high global oil prices, Russia’s oil and gas revenues have fallen by more than 14 percent compared to the same period last year.

Interesting. The European Union is preparing to approve new sanctions on November 16 against approximately 150 Russian individuals and entities. The restrictions will target about 50 banks, energy companies, and entities that support the “shadow fleet” and circumvent previous bans.

At the same time, military spending continues to rise rapidly. According to analysts’ estimates, it will total 17 trillion rubles this year, which is 40 percent higher than initially planned.

The situation is so serious that the Russian government’s financial ministry is warning that it will be impossible to sustain the current level of war spending.

Covert Mobilization and a Demographic Catastrophe

Amid economic problems, Russia is facing unprecedented human losses, which are forcing the authorities to intensify covert mobilization.

Ordinary citizens suddenly find themselves serving as assault troops, while their relatives lose all contact with them. A telling example is the story of a conscript from Neftekamsk who was detained on the street, sent to a combat zone, and subsequently declared missing in action—even though he continued to make contact.

An analysis of a data leak from the Russian civil registry confirms the catastrophic scale of the losses. About 89 percent of registered military deaths occurred in Ukraine or in Russian border regions.

The highest number of fatalities was recorded along the lines of Russia’s main offensives, particularly in the Pokrovsk district of the Donetsk region. These figures are significantly underestimated due to the delay between actual deaths and their official registration; however, they already indicate that Russian casualties are breaking all historical records.

Vulnerability of Critical Infrastructure and Logistics

In addition to oil refining, Ukrainian strikes are inflicting damage on other critical sectors of the Russian economy. Attacks on Yandex’s data centers led to the irreversible loss of some customer data and forced the evacuation of supercomputers used for artificial intelligence development. Proposals by Russian authorities to move servers underground only underscore their helplessness in the face of the threat from the air.

The collapse of a railway bridge in the Arkhangelsk region dealt an additional blow to logistics, cutting off entire regions—such as the Komi Republic and Vorkuta—from the rest of the country. The lack of alternative routes makes it impossible to quickly restore transportation links.

All of this is unfolding against the backdrop of preparations for a harsh winter, when Russian regions may face the same heating and power supply problems that the occupying authorities have created in the occupied territories of Ukraine.

The combined impact of these factors is placing unprecedented pressure on the Russian state apparatus, bringing closer the moment when the economy will no longer be able to support the Kremlin’s military ambitions.

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