Overview
Ukraine is leveraging its newfound indigenous long-range strike capability to escalate pressure on Russian refineries, export terminals and shadow fleet vessels, aiming to level the fiscal playing field in a war of attrition. Some of the results of the campaign are striking, including the reduction of Russian refining to about 57% of total capacity and inducing Russian export bans on refined products like diesel to contain shortages. However, the campaign has not yet reduced Russian export volumes of crude, so Ukraine has escalated strikes on Russia’s broader industrial economy and shadow fleet vessels in the Black Sea. The kinetic sanctions campaign creates downside risks of divergence between Ukraine and its Western backers, which want to constrain Russian fuel revenues as opposed to supply. Kinetic sanctions in the Black Sea have also created commercial spillovers, intermittently halting the export of Kazakh crude, one of Europe’s main diversification sources, and spiking maritime insurance for civilian sectors. On the upside, Ukrainian strikes on shadow fleet vessels may compel Russia to utilize more vessels covered by Western insurance and the G7 oil price cap.
Understanding the Scale of Ukraine’s “Kinetic Sanctions” Campaign
Ukraine has dramatically stepped up a long-range strike campaign against Russian critical infrastructure, including refineries, export terminals, and industrial sites that enable reconstruction. In the first six months of 2026, Ukraine successfully hit Russian energy targets 194 times, an 11-fold increase from a year before. Ukraine calls this a “kinetic” sanctions approach, which is intended to intensify domestic political pressure and reduce Russian energy revenues. In essence, Ukraine aims to hit what Western financial sanctions cannot.
The largest target is oil refineries. In July, Russia’s refining capacity was reduced to about 3.6 million barrels per day (bpd), about a 32% reduction from the five-year average and 57% of the country’s total refining capacity. In total, 18 refineries were hit, including a refinery in Omsk, which is located about 2,500km from Ukraine and accounts for 7% of national refining capacity. These strikes cause intermittent suspensions of operations but not permanent damage. In response, Russia has implemented stabilization measures, including fuel rationing and export bans on petrol and jet fuel until 2027; a separate ban on diesel is scheduled to loosen by September but could be delayed. Russia has imported diesel and gasoline from India, Mongolia, and Morocco. These measures have absorbed some of the impact, with some energy companies lifting some petrol and diesel purchase restrictions around major cities.
Russia’s export ban on fuels has rattled global markets. In July 2025, Kpler data showed that Russia exported 535,000 bpd of diesel, or roughly 10% of global exports. By the first week of July 2026, this had been reduced to 187,000 bpd before Russia decided to redirect supplies exclusively to its domestic market. European markets have had a slow but significant reaction; diesel refining margins in Europe peaked at $60.17 per barrel after Russia announced the diesel export ban, and gasoline traded at $41 per barrel, a peak similar to after Russia’s initial full-scale invasion of Ukraine in 2022.
Ukraine has also targeted major export terminals to prevent Russian seaborne crude and oil products from entering global markets, like the Baltic Sea ports of Ust-Luga and Primorsk and the Black Sea ports of Novorossiyk, Tuapse, and Taman. This campaign has had mixed effects. Since February 2026, average daily export volumes of refined oil products have fallen by about 20%, but daily revenues have increased by 21% to an average of €211 million in June. Daily export volumes of seaborne crude have increased by 38%, but average daily revenue has fluctuated from €232 million in February, €431 million in March, and €348 million in June.
The supply and price data suggest three things. First, the price fluctuations suggest that Russia has weathered Ukrainian pressure through a global supply crunch and plenty of Russian product at sea, waiting for a buyer when prices are higher. Second, crude exports, the moneymaker, remain more insulated from Ukraine’s pressure campaign than oil products. Russia is also emphasizing crude exports that cannot be processed at home due to crunched refining capacity. Third, Ukraine has so far not imposed sustained limits on Russian export capacity, possibly due to improving air defenses and a responsive industrial reconstruction ecosystem.
Ukraine has extended the kinetic sanctions campaign to Russia’s grain and fertilizer exports. On July 10, Ukraine attacked 13 vessels in the Sea of Azov, which connect Russia’s coastal wheat-producing regions to the Black Sea through the Kerch Strait. Ukraine’s attacks led to the effective closure of Kerch, which normally transits up to 35% of Russia’s wheat exports, most of which arrive in Africa and the Middle East. Moscow can try to shuffle some of the exports to other ports, but they are already operating at full capacity and are also under threat of strikes. This means Russia could lose up to 6.5 million metric tons of export capacity in 2026, or roughly $1.5 billion at current prices.
Kinetic Sanctions Are Pressuring Both Russia and the West
Much like a financial sanctions campaign, Ukraine aims to maintain and escalate its kinetic sanctions to slowly compound pressure on Russia’s commodities sectors. The strikes have concentrated on Russia’s refining capacity, triggering the export bans of diesel and other refined products. However, Russia’s crude export volumes remain relatively stable due to pipeline deliveries and product already at sea (albeit dwindling). Windfall profits from disruptions in the Strait of Hormuz have also outmatched lost export volumes. For the campaign to have a lasting effect, Ukraine must bet that it will maintain pressure on Russia’s broader industrial sector as oil prices, storage capacity, and surplus supplies gradually fall, which is an unpredictable timeline.
A broad Ukrainian kinetic sanctions campaign against Russia’s industrial sectors will escalate spillover risk. Since July 18, Ukraine has hit at least 18 warehouses owned by Wildberries, Russia’s largest e-commerce platform, corresponding to the destruction of nearly a fifth of its warehouse space. Ukrainian strikes on the Caspian Pipeline Consortium terminal at the Russian Black Sea port of Novorossiysk led Kazakhstan, one of the largest oil providers to Europe, to halt about two-thirds of its oil exports in late July. And a Ukrainian strike on an Iranian cargo vessel in the Caspian Sea, allegedly transporting military equipment to Russia, could spike maritime insurance in the area.
Ukraine’s Western allies observe the kinetic sanctions campaign with some unease. Ukraine, now possessing a long-range strike capability at scale and independent of Western conditions, does not need to coordinate with the G7 sanctions regime. Namely, Ukraine is prioritizing the reduction of Russian export volumes, contradicting the EU and UK’s prioritization of containing Russian oil revenues but stabilizing supply through the oil price cap on Russian seaborne crude. The US has also prioritized stability, issuing temporary sanctions waivers on Russian crude at sea at the beginning of the Iran war and delaying enforcement of sanctions against Rosneft and Lukoil. The squeeze on Russian supplies comes at an inconvenient time for Europe, which is facing unprecedented energy pressure due to low gas and oil storage levels, plus low water levels in the Danube, which has dramatically reduced the capacity of nuclear and hydropower plants in central and eastern Europe.
Ukraine’s kinetic sanctions, by disrupting the Caspian Pipeline Consortium, could undermine European efforts to diversify from Russian crude. Many of the Russian-owned refineries in Europe, now under trustee management or facing ownership changes, have switched from Russian crude to Kazakh crude. For example, up to 60% of Romania’s crude comes from Kazakhstan. Exports of Kazakh crude to Europe from the Black Sea port of Novorossiysk, the only viable route at an efficient scale, corresponded to an average of 1.42 million bpd over the last three months. With this route intermittently cut off and with maritime insurance spiking, Europe’s switch to Kazakh crude has become an unintended chokepoint.
However, on the upside, Ukraine’s kinetic sanctions have also resulted in strikes on up to 200 Russian “shadow fleet” vessels in the Black Sea and the Sea of Azov. As the risks of the shadow fleet increase, Russia may shift more export capacity to vessels covered by Western insurance, which accounted for about 44% of seaborne exports in June. However, this will increase vested interest among EU members with large commercial shipping fleets to prevent a maritime services ban on Russian fuels, a key political flashpoint of the most recent EU sanctions package.
Ukraine’s kinetic sanctions campaign could also push Russia to desperation. This is because Russia conducts most of its foreign exchange operations through fuel exports now that the Russian Central Bank is sanctioned. Without foreign currency entering Russia, the ruble’s volatility could spike, the budget deficit could increase, and Moscow could struggle to pay for foreign goods. On the upside, Russian currency volatility could indeed compel Moscow to the negotiating table. On the downside, the Kremlin may view the threat existentially, choosing to dramatically escalate instead of agreeing to a ceasefire. Russia could escalate geoeconomically, extending export bans to crude or gas to refill storage capacity and surge global prices. Russia could also escalate militarily, pummeling Ukraine’s civilian areas, energy infrastructure, and grain-carrying vessels with ballistic missiles.
