Putin’s economy is running on fumes after Ukrainian attacks

Key Points:

• Ukrainian missile and drone strikes on Russia's energy infrastructure have triggered a severe fuel crisis, with two-thirds of Russian regions reporting supply issues, notably impacting Crimea where a state of emergency and fuel sales ban have been declared.
• President Putin acknowledged the fuel shortages but downplayed their severity, while Russia has stopped publishing domestic fuel prices, masking the crisis's true scale; social media show growing public unrest and conflicts over gasoline.
• Ukraine's targeting of critical refinery units, such as catalytic crackers, has hindered Russia's ability to repair and maintain fuel production, prolonging shortages despite ongoing repair efforts.
• Rising fuel prices are fueling inflation concerns, with the Central Bank of Russia adopting a cautious monetary policy, resisting calls for faster interest rate cuts amid fears of worsening inflation or stagflation.
• Economic pressures from the war are mounting, with military spending consuming nearly half of the government budget and national reserves sharply depleted, highlighting broader financial strains beyond just fuel shortages.