Russian Gasoline Shortages Compound Economic Struggles

Russia is running short on gas.

On June 24, Reuters reported that Russia petitioned Kazakhstan to provide 50,000 metric tons of AI-92 gasoline to alleviate domestic shortages. Despite its status as the world’s third-largest producer and second-largest exporter of crude oil — which is eventually refined into products like gasoline — Ukrainian strikes on Russian infrastructure have slashed Moscow’s capacity to refine raw energy into useful forms.

Throughout 2026, Ukrainian forces have conducted a renewed campaign of drone attacks on Russian oil refineries, ports, and pipelines for the express purpose of inflicting economic pain. As compared to June 2025, Russian gasoline production has dropped about 25 percent. For the Kremlin, the current fuel crisis and diminished revenues necessitate tough choices to balance military needs with basic societal ones.

Russia’s Fuel Crisis Is Record-Breaking

Two-thirds of the 83 Russian federal entities are experiencing fuel rationing — implemented either by government mandates or private companies. The situation is most extreme in Ukrainian territories long occupied by Russia, exacerbated by Ukrainian strikes on logistical infrastructure that have prevented fuel transit. In Crimea, occupation authorities temporarily ended gasoline sales entirely due to supply issues.

Hard-pressed Russians are drawing outside the lines to mitigate fuel crisis impacts, as are some of the countries that depend on Russian fuel exports. Kazakh leaders have noted major fuel smuggling efforts in 2026, with Kazakh authorities reporting the apprehension and stopping of over 700 illicit initiatives to smuggle fuel-related products abroad.

Successful fuel smuggling from Kazakhstan likely occurs on a total scale of hundreds of millions of dollars. A single gang reportedly managed to smuggle over $75 million worth of AI-92 gasoline alone to another Central Asian neighbor. Meanwhile, Russian authorities have relaxed quality standards for fuel.

Russia’s Economy Is Being Squeezed

Russia’s broader economy is struggling due to a combination of military costs, labor shortages, and sanctions. Growth figures for 2025 and projections for 2026 have stagnated at 1 percent — despite inflation of around 5 to 9 percent — and the Kremlin’s budget deficit doubled over the past year. Low growth and depleted reserves have removed Russia’s economic cushion as Moscow struggles to keep inflation and interest rates in check while demand for debt through domestic borrowing grows. Meanwhile, Russia has raised tax burdens on its population, while President Vladimir Putin has reportedly solicited oligarchs for “donations” to the Kremlin’s budget. Growing economic challenges coupled with an increasingly fleeced population pose a challenge for Putin in pitching the war in Ukraine as a wise long-term commitment.

Putin’s war continues to upend the implicit social contract between the state and the Russian people, in which the latter accept authoritarianism in exchange for stability and economic benefits — including subsidized fuel prices. Increased financial pressure on both Russia’s public and Russia’s elite could lead to broad-spectrum societal dissatisfaction and low productivity that impede Putin’s effectiveness at marshaling long-term support for the war in Ukraine.

Maintain Pressure

Increasing Russian economic strain is a positive sign for the Ukrainian war effort, both providing added leverage in negotiations and weakening the Russian military’s financial support.

The United States should compound economic pressure on Russia by doubling down on sanctions enforcement measures. This includes direct efforts to prevent a restoration of Russian refinery capacity, such as aggressive investigation and designation of shell companies that may be evading export control restrictions on technologies to support Russian refinery capacity.

The U.S. should also pursue the tightening of restrictions impacting Russia’s broader economy and ability to process global transactions. Washington should consider expanding its current sanctions designations to include additional Russian enabler networks, illicit financial networks, and procurement systems recently designated by the European Union and United Kingdom.

Angela Howard is a research analyst at the Center on Economic and Financial Power (CEFP) at the Foundation for Defense of Democracies (FDD). For more analysis from the author and FDD, please subscribe HERE. Follow FDD on X @FDD and @FDD_CEFP. Follow Angela on X @angela__howard. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.