Putin signs emergency tax law as Ukrainian drone strikes cripple Russia's fuel supply

This law followed an earlier decree by Putin in October 2025 that extended fuel "damper" compensation payments to oil companies through May 2026, prohibiting suspension of those subsidies . The Russian parliament had approved the tax changes on June 24, 2026 .

What caused the crisis: Ukraine's drone campaign

The primary driver was Ukraine's sustained campaign of long-range drone strikes against Russian oil refining infrastructure, which began escalating sharply in August 2025 .

• Scale of attacks: By late March 2026, an AP count recorded over 50 Ukrainian strikes on oil refineries, depots, terminals, and other oil infrastructure in Russia and occupied Crimea .
• Refining capacity knocked offline: Ukraine destroyed or damaged facilities processing roughly 1 million barrels of crude oil per day — about 20% of Russia's total refining capacity — as of October 2025 . By July 2026, June refining throughput had fallen 25% year-on-year to 3.95 million barrels per day, the lowest level in over two decades .
• Critical targets: Drone hits specifically targeted hydrocrackers, which are essential for producing high-octane gasoline, sparking a pronounced gasoline crunch .
• IEA assessment: The International Energy Agency warned that drone strike impacts would suppress Russia's refinery processing rates at least until mid-2026 .
• Capacity utilisation: By October 2025, approximately 40% of Russia's refining capacity was reported idle, with Ukrainian drone assaults accounting for around 70% of the shutdowns .

Broader consequences

Fuel rationing and shortages

• Russians faced long queues at petrol stations and fuel rationing across multiple regions .
• Crimea declared a state of emergency in June 2026 and banned all fuel sales .
• The Russian government imposed intermittent bans on gasoline exports starting in March 2024 and escalated them in 2025–2026 . By October 2025, the export ban was extended until the end of the year, and subsequently until May 2026 .

Russia's shift from exporter to importer

• With domestic refining crippled and export bans in place, Russia — historically a major fuel exporter — was forced to begin importing gasoline to cover domestic demand . The July 2026 tax law explicitly subsidized these imports from India .

Ripple effects on Central Asia

• Kyrgyzstan, which imports over 90% of its gasoline from Russia, formally asked Kazakhstan, Belarus, Azerbaijan, Uzbekistan, Turkmenistan, and Russia for emergency fuel supplies in early July 2026 .
• Tajikistan and Uzbekistan were also heavily dependent on Russian fuel and faced tightening supplies as Moscow redirected output to its own market . Tajikistan, which imports almost all its fuel mostly from Russia, was among the hardest hit .
• Central Asian nations began seeking alternative fuel import sources as Russian supply became unreliable .

Electric vehicle sales surge

• EV demand surged sharply as fuel shortages worsened, particularly in June 2026. Moscow car dealerships reported struggling to keep up with demand for Chinese-brand electric vehicles .
• Rosatom, the state nuclear corporation, reported a 40% rise in usage at its EV charging stations, and its CEO forecasted further growth .
• Important caveat: Some data suggested the EV market was still small in absolute numbers. As of June 22, 2026, only 231 new EVs were registered in a single week, and the Autostat agency director said there was not yet a "massive" switch . The surge was real but from a low base, and driven heavily by Chinese imports .