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 .

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 .