Russia’s crude output declined to the lowest in at least two and a half years in June as Ukraine attacked the nation’s oil infrastructure on an almost daily basis. But LNG production remains untouched and exports to Europe are at their highest level ever.

There is a fundamental conflict of interests at the heart of Europe’s relations with Russia. On the one hand, Brussels wants to punish Moscow for its unprovoked invasion of Ukraine four years ago and it keeps pressing for ever more extreme sanctions. On the other, European businesses and its economic model remains heavily dependent on cheap Russian imports of energy and raw materials and business leaders try and limit or ignore sanctions as much as they can.

That dichotomy was on display again this week, not just with the record level LNG imports, but also with the European Commission (EC) failure to get its tough version of the 21^st sanctions package approved by the European Parliament. The latest package has been watered down yet again but EU members like Greece and Malta which are making money hand over fist transporting Russian oil to customers around the world.

Russia’s oil producers pumped an average of 8.928mn barrels a day of crude, which is 834,000 barrels a day below Russia’s required level for the month under an agreement with OPEC and its allies -- the lowest level since February 2024, Bloomberg reports. The June figure is 834,000 b/d less than Russia’s assigned OPEC quota and 61,000 b/d below May’s level, according to OPEC data.

“A wave of Ukrainian attacks has pushed Russian refining runs to the lowest in more than 21 years, deepening a domestic fuel crunch and further squeezing the global market.

Crude-processing rates have averaged 3.91mn barrels a day so far this month, the lowest level since March 2005, according to figures compiled by EA Analytics. That’s more than 1.4mn barrels a day below the year-ago average, the data show.

The drop in production has prompted a ban on most diesel exports to the end of July, in addition to restrictions on gasoline and jet fuel shipments introduced earlier. The loss of diesel from a key global supplier has driven prices to multiyear highs, with the market already tightened by disruptions to Middle East flows.”

Kyiv has mounted a sustained bombardment hitting all 30 of Russia’s major oil refineries, many of them repeatedly, in more than 50 attacks in the last 100 days, Bloomberg reports.

As refined oil throughput falls and refinery runs fall to their lowest level in more than two decades, crude exports have jumped to a four-week average of 4.13mn b/d of seaborne crude shipments as of June 28 -- the highest since Russia started its full-scale invasion of Ukraine in 2022.

LNG exports booming

So far Ukraine has not targeted Russian LNG production and gas exports remain unsanctioned. As IntelliNews reported, Ukraine’s widening drone campaign against Russian energy infrastructure raises the prospect that Kyiv widen its campaign and target Russia’s LNG assets in the Arctic, which would cause a major energy crisis in Europe. The pressure from Brussels on Kyiv not to attack Russia’s LNG must be intense.

Europe is in the midst of a mounting gas crisis having started this year with record low levels of gas in storage. It is importing every drop of Russian LNG it can get its hands on, despite promising to ban the import of Russian LNG from the start of next year.

The imports from Russia’s Yamal LNG facility reached a record high in the first half of 2026. EU countries received 136 cargoes containing 9.97mn tonnes of LNG between January and June, a 16% increase year on year, according to data from commodities intelligence group Kpler.

More than 97% of Yamal's LNG deliveries during the period went to EU ports, despite Brussels' stated desire to wean itself off Russian gas. Yamal LNG is controlled by Russia's Novatek (MOEX: NVTK), with China's CNPC and France's TotalEnergies (EPA: TTE) also holding stakes. Campaign group Urgewald estimated EU purchases from Yamal were worth €5.96bn ($6.82bn) in the first six months of the year, with France, Belgium and Spain the three largest destinations. Europe, the group said, "is absorbing almost the entire output of one of Russia's most strategically important LNG projects."

The surge reflects a broader increase in Russian gas purchases as European companies scramble to meet the 80% full tanks benchmark by the November 1 EU deadline and front-load supplies before the EU's phased ban takes full effect.

Russian pipeline gas imports via Druzhba pipeline increased 7% year on year between January and May 2026, while LNG imports rose 11%, according to the EU Agency for the Cooperation of Energy Regulators.

Short-term Russian LNG contracts have been banned since April as part of the coming full-scale ban legislation, but long-term contracts can continue until January 1 2027, while the final deadline for ending all Russian pipeline gas imports – including those headed for Hungary and Slovakia – is September 2027. The EU's 2025 ban on trans-shipment of Russian LNG has also meant more Yamal cargoes remain in Europe rather than being re-exported to Asia.

Oil refining battered but not broken

Despite the dramatic nature of Ukraine’s campaign, the oil product sector remains battered but not broken, according to Sergey Vakulenko, an independent energy analyst argued in a recent note for Carnegie Endowment for International Peace.

Despite an unprecedented tempo of drone attacks and growing damage to the hard-to-replace specialist processing equipment that Ukraine is now specifically targeting, Russian refiners have repeatedly demonstrated an ability to carry out rapid repairs and restore at least part of their lost capacity quickly.

In April and May, Ukraine launched 26 attacks on Russian refineries, matching the number recorded in August and September 2025, when Russia also suffered noticeable petrol shortages. The impact on processing has been more severe this year and the fuel crisis worse.

Russian refinery throughput stood at about 5.2mn barrels a day at the end of March, but fell by as much as 700,000 barrels a day, or 13%, during April and May. That compares with a maximum decline of 480,000 barrels a day, or 9%, during the 2025 attacks.

The damage is also becoming harder to fix. Vakulenko says NASA fire data suggest more Ukrainian drones are reaching their targets than ever before, increasingly striking not only primary processing units, which are relatively straightforward to repair, but complex isomerisation, cracking and hydrotreating units. Replacement components often have to be imported, lengthening repair times, while some damaged plants can maintain output only by producing lower-standard motor fuels. For example, the key Moscow refinery that was hit earlier this month will be offline for the rest of this year, according to reports.

Yet Russia's refining system has proved remarkably resilient, says Vakulenko. After throughput dropped below 4mn barrels a day following a wave of attacks in late May, it rapidly recovered to more than 4.5mn barrels a day in the week beginning June 4, probably as several plants completed emergency repairs. Similarly, Ukrainian attacks briefly halved the number of loaded tankers leaving Russia's Baltic and Black Sea ports in June following the attacks on Primorsk and Ust-Luga, but traffic quickly recovered. Seaborne oil exports reached about 3.8mn barrels a day in the second half of April — some 500,000 barrels a day above the combined 2023-25 average.

The pressure is nevertheless mounting. Attacks on the Moscow refinery at Kapotnya and Tatneft's (MOEX: TATN) TANECO complex in mid-June knocked out another 600,000 barrels a day of capacity. If previously damaged refineries cannot return quickly, Vakulenko estimates Russia's available refining capacity could fall as much as 28% below previous years.

The geographical concentration of the damage is particularly problematic: all three refineries supplying Moscow by pipeline — Yaroslavl, Ryazan and Kstovo — have been hit. The capital and surrounding region account for about 14% of Russia's 53mn passenger cars, while 40% of the country's air passenger traffic passes through Moscow.

For now, Ukraine's strikes have inflicted significant damage without delivering a knockout blow. But the cumulative destruction of increasingly complex refining equipment, combined with logistical bottlenecks and the Kremlin's politically sensitive policy of artificially suppressing petrol prices, is narrowing Moscow's room for manoeuvre.      

As Vakulenko warns, if the authorities can no longer prevent a petrol deficit, the question will shift from whether shortages emerge to "how they will organize the distribution of a scarce resource."