Since Russia’s full-scale invasion of Ukraine in February 2022, the conflict has evolved into a protracted war of attrition, with both sides employing asymmetric tactics to undermine the other’s capabilities. By August 2025, Ukraine has increasingly shifted focus to offensive operations within Russian territory, including drone strikes on critical infrastructure and ground incursions such as the one in Kursk Oblast.
These attacks aim not only to degrade Russia’s military strength but also to inflict economic pain, disrupting revenue streams and straining resources essential to sustaining the war effort. While Russia’s economy has demonstrated remarkable resilience – bolstered by military spending, oil exports, and circumvention of Western sanctions – the cumulative impact of Ukrainian strikes is mounting, contributing to inflation, production shortfalls, and a forecasted slowdown in growth.
Ukraine’s strategy has emphasized long-range drone strikes and limited ground operations to target Russia’s economic vulnerabilities. Drone attacks, often conducted by Ukraine’s Military Intelligence (GUR), have primarily focused on the energy sector, including oil refineries, storage depots, and gas facilities.
By mid-2025, Ukraine had launched over 61 drone strikes on Russian oil refineries since January 2024, with a renewed campaign in the summer of 2025 hitting facilities in regions like Ryazan, Saratov, Volgograd, and even distant Komi Republic. These operations have evolved in sophistication, reaching targets over 1,200 miles from Ukraine’s borders and causing fires, explosions and operational halts.
On the ground, the most notable incursion occurred in Kursk Oblast starting August 6, 2024, where Ukrainian forces seized over 1,100 square kilometers, including the town of Sudzha and its key gas metering station. Although the operation’s scale diminished by 2025, it forced mass evacuations and highlighted Russia’s border vulnerabilities. Other attacks include strikes on military airfields and depots, but their economic ripple effects are more indirect, contributing to heightened defense spending and supply chain disruptions.
These actions are designed to erode Russia’s war economy, which relies heavily on hydrocarbon revenues (accounting for about 40% of federal budget income) and military-industrial output. However, quantifying the damage is challenging due to Russia’s opaque reporting and the interplay with broader sanctions.
The Russian energy sector has borne the brunt of Ukrainian attacks, with drone strikes inflicting substantial physical and financial damage. From September 2024 to February 2025, Ukrainian operations destroyed or damaged 97 oil storage tanks, causing an estimated 60 billion rubles ($714 million) in losses, based on satellite imagery and market price analyses.
A single incident in October 2024 at a depot in Feodosia, Crimea, destroyed tanks holding 69,000 cubic meters of oil, valued at up to 3.3 billion rubles ($39 million). If including a February 2025 strike on Gazprom’s Astrakhan gas refinery – which halted operations for 3-6 months – the total could reach 77.9 billion rubles ($927 million).
In 2025, the assaults intensified, reducing Russia’s overall refinery capacity by nearly 10% as of August. Key facilities like Rosneft’s Ryazan refinery (capacity: 13.7 million metric tons annually) saw half its output halted after damage to two main units, while the Novokuybyshevsk refinery shut down its primary distillation unit entirely.
Over a three-week period in summer 2025, strikes wiped out 13.5% of refining capacity, leading to fires at sites in Volgograd, Saratov, and Krasnodar, including Russia’s largest helium plant critical for missile fuel.
The economic consequences are multifaceted.
Refinery output fell by 15% in 2024, prompting a gasoline export ban extended into 2025 to prioritize domestic supply. In 2025, potential losses could reach 8% of total refining (from 267 million tons processed in 2024), forcing Rosneft to boost crude exports by 13% in August to compensate. While Russia’s 2024 oil export income was $189 billion, repeated strikes erode this revenue stream, with unrepaired tanks (only 1 of 16 damaged from late 2024 to early 2025 restored) exacerbating shortages.
Reduced capacity has caused gasoline shortages and record-high prices in Russia, with officials blaming citizens for stockpiling. This contributes to inflation, already at elevated levels due to war spending.
Ukrainian strikes disrupt Russia’s war funding, as hydrocarbons finance military operations. A brief March 2025 energy cease-fire failed to enable full repairs, with experts noting the financial toll on Russia’s cash flow outweighs Ukraine’s gains from the pause.
Overall, energy sector damages from Ukrainian attacks are estimated in the hundreds of millions to low billions of USD annually, representing a fraction of Russia’s $189 billion oil income but amplifying sanctions’ bite by forcing reallocations and reducing efficiency.
Ukraine’s ground incursion into Kursk Oblast, while militarily symbolic, has inflicted targeted economic costs. Direct damages include infrastructure destruction and evacuation expenses, estimated at 1 billion rubles ($10.7 million) per day for up to 120,000 evacuees in Kursk and additional thousands in neighboring Belgorod. The region, with a modest gross regional product of $7.5 billion, contributes minimally to national GDP but is vital for agriculture (2.7% of Russia’s output) and gas transit.
Agricultural impacts could raise meat prices by 15-30% in central Russia if key pork and poultry farms (25.6% and 15.2% of national production in Kursk and Belgorod) are disrupted. Transport has suffered, with Moscow Railway stations closed, causing shipment delays and idle wagons. The Sudzha gas station, handling $7-8 billion in annual Russian revenues, remains operational despite Ukrainian control, but a cutoff could spike European prices by 20%.
Long-term effects include threats to the Kursk nuclear plant, which powers 19 regions, and increased military spending of 3-5 billion rubles daily for reinforcements. The incursion has eroded investor confidence in border regions, potentially leading to economic decline and renewed mobilization debates, which could exacerbate labor shortages (unemployment at 2.3% but with acute deficits in key sectors). Total costs for Kursk are estimated around $1 billion, though this is dwarfed by overall war expenditures.
Ukrainian attacks contribute to Russia’s projected economic slowdown, with IMF forecasts showing GDP growth dipping to 1.4% in 2025 from 4% in 2024, amid inflation, labor shortages, and a “two-speed” economy where military sectors thrive but civilian ones lag. The war’s total cost to Russia includes frozen reserves ($340 billion) and sanctions, but attacks amplify these by necessitating repairs and defenses, diverting funds from growth.
Inflation has risen due to fuel disruptions and spending, with the Central Bank hiking rates. Globally, the conflict exacerbates food and energy prices, but specific to Russia, attacks may reduce export earnings by 5-10% in affected sectors. Russian sources emphasize resilience, citing 5.6% GDP growth since 2022, but acknowledge long-term degradation.
| Sector | Estimated Damage (2024-2025) | Key Effects |
|---|---|---|
| Energy (Oil/Gas) | $714M – $927M (strikes Sep 2024-Feb 2025); 10-13.5% capacity loss in 2025 | Reduced exports, domestic shortages, inflation spike |
| Kursk Incursion | $1B total; 1B rubles/day evacuation | Agricultural disruptions, potential gas transit loss ($7-8B annual revenue at risk) |
| Overall Economy | Contributes to 2025 GDP slowdown (1.4%); indirect costs via higher military spend | Labor shortages, investor flight in border areas |
Russia has responded by accelerating repairs (though hampered by sanctions and repeat strikes), deploying air defenses, and boosting crude exports. The Kremlin downplays losses, focusing on economic health indicators like low unemployment. However, as attacks persist, the cumulative toll – potentially tens of billions in direct and indirect costs – could force trade-offs between war funding and civilian welfare, risking recession in 2025.
In conclusion, while Ukraine’s attacks have not crippled Russia’s economy, they have inflicted meaningful damage, estimated at $1-2 billion in key sectors by mid-2025, exacerbating structural weaknesses. As the war drags on, these operations may prove increasingly costly for Moscow, underscoring the economic dimension of modern warfare.