Putin’s Two Pillars of Russian Resilience Are Crumbling

Key Points:

• On June 18, Ukraine launched what Russian officials called the largest drone assault on Moscow since the full-scale war began, striking the Kapotnya oil refinery and causing significant damage that may keep it offline for the rest of the year.
• Ukraine’s long-range strikes are targeting Russia’s oil infrastructure, including refineries and fuel depots, severely reducing refining capacity and forcing Russia to import gasoline and ration fuel domestically.
• Russia’s oil revenue has dropped sharply, with Brent crude and Urals oil prices falling significantly, contributing to a federal budget deficit and reducing funds available to sustain the war effort.
• Russia’s gold reserves, a key financial hedge against sanctions, have also declined in both quantity and value as the government sells bullion to cover budget shortfalls, weakening its economic buffer.
• Despite these pressures, Russia’s oil exports and gold reserves remain substantial, allowing Moscow to adapt and continue financing the war, though the two economic pillars supporting Putin’s regime are increasingly strained.