The same Ukrainian drone campaign that is disabling Russia’s refineries and creating fuel queues from Moscow to Crimea is also rewriting Washington’s assumptions about who is winning the war. The two developments are not separate. They are cause and effect.
July 5, 2026.
The war in Ukraine has entered a new phase, and the shift is measurable in both military assessments and economic indicators. Former US Assistant Secretary of State Daniel Fried, speaking to the Kyiv Post in late June, offered a blunt summation that is gaining traction in Western capitals. “Russia is no longer winning,” Fried said. “It is beginning to lose.”
The assessment marks a dramatic reversal from the prevailing wisdom that dominated Washington through the first three years of the war. In 2022, the consensus inside the Biden administration and the US intelligence community was that Ukraine would “fight very bravely and lose very quickly.” When that failed to materialize, the narrative shifted to a slow-bleed scenario: Ukraine would “fight very bravely and slowly lose,” a view Fried says was pushed heavily by major American publications at the time.
Today, those assumptions have collapsed. Ukraine’s expanding deep-strike drone campaign has changed both the military and political logic of the conflict. Ukrainian drones and missiles are now hitting targets hundreds of kilometers (hundreds of miles) inside Russian territory, striking oil refineries, fuel depots, pumping stations, and military production facilities with a frequency that Russian air defenses have been unable to stop. Even the heavy layered defenses around Moscow proved porous: in early June 2026, Ukrainian drones struck the Kapotnya oil refinery on the capital’s southeastern edge, sending a plume of greasy black smoke over the city and demonstrating that nowhere in Russia is safe.
The military impact is clear. The UK Ministry of Defense assessed in May 2026 that operational momentum has shifted toward Ukraine. Fried pointed to this shift in a broader strategic argument. He recalled that President Donald Trump told Ukrainian President Volodymyr Zelensky in early 2025 that Kyiv “didn’t have any cards.” “It is now becoming clearer that Ukraine in fact has a lot of cards,” Fried said. “Trump loves winners. Ukraine is winning.”
But the most consequential effect of Ukraine’s deep-strike capability may be economic. The same drone campaign that is embarrassing the Kremlin militarily is systematically dismantling Russia’s domestic fuel production, creating the worst energy crisis the country has faced since the 1990s.
The numbers are stark. Since August 2025, Ukraine has targeted Russian oil infrastructure with escalating intensity. Between January and May 2026, Russian refineries were attacked 38 times by drones and missiles. May set a record with 16 facilities struck in a single month. By mid-2026, approximately 35 percent of Russia’s refining capacity had been knocked offline, including eight of the country’s ten largest refineries. More than 70 large storage tanks have been damaged or destroyed. Fuel production has fallen to its lowest level in 21 years.
The result is a fuel crisis that is now touching ordinary Russians in ways the war has not before. According to Politico, two-thirds of Russia’s regions are reporting fuel supply issues. Fuel rationing has been introduced in at least 25 regions, including Moscow and St. Petersburg. In Crimea, the Moscow-installed authorities declared a state of emergency in June 2026 and banned fuel sales entirely. Long queues of cars snake beside gas stations across the country. Social media videos show drivers cursing at empty pumps. The mayor of Irkutsk ordered portable toilets brought in to accommodate those waiting in line.
President Vladimir Putin has been forced to acknowledge the crisis publicly. In late June, he held a high-level meeting with Deputy Prime Minister Alexander Novak and the heads of Rosneft, Lukoil, Gazprom Neft, Surgutneftegaz, and Transneft. “Problems for car owners and businesses persist,” Putin admitted. “Unfortunately, there are still queues at petrol stations, and some highly demanded fuel brands may be hard to find.” He insisted the shortages were “not critical” and “temporary,” but the Kremlin’s actions tell a different story.
Russia, one of the world’s largest oil exporters, is now negotiating to import gasoline from abroad for the first time since the 1990s. Kremlin spokesman Dmitry Peskov confirmed on June 30 that talks are “actively being held” with several countries, though he declined to name them. Reuters reported that Russia is discussing the purchase of approximately 50,000 metric tons of AI-92 grade gasoline from Kazakhstan. Deputy Prime Minister Novak has described imports as one of the government’s key tools for stabilizing the market. The Duma has approved tax code amendments creating subsidies to facilitate gasoline purchases from abroad.
The government has also banned gasoline and jet fuel exports and is now considering a total ban on diesel exports. A 24/7 situation center has been established to monitor fuel supply. None of these measures have resolved the underlying problem: Ukraine keeps hitting the refineries, and Russia cannot repair them faster than they are being destroyed.
This brings the question into focus: Will economic pressure push the Kremlin toward peace talks with Kyiv? The answer, at least for now, appears to be no. Fried, who served as Assistant Secretary of State for European and Eurasian Affairs and as US Ambassador to Poland, argued that the main obstacle is Putin himself. The Russian president still believes he can achieve total victory and has shown no interest in meaningful negotiations. “Putin’s maximalist position remains the central problem,” Fried said. The Kremlin has consistently demanded Ukrainian capitulation as a precondition for talks, a position Kyiv will not accept.
But the calculus may be changing in ways that could eventually force a reassessment inside the Kremlin. The fuel crisis is not an isolated event. It compounds a broader set of pressures: a growing budget deficit that exceeded the entire annual plan in the first quarter of 2026, rising inflation, labor shortages driven by military mobilization, and the cumulative weight of Western sanctions. The International Energy Agency reported that Russia’s oil revenue has declined to one of the lowest levels since the war began in 2022. Energy analyst Craig Kennedy has described the situation as “the worst crisis in Russia’s energy sector since the 1990s.”
Sergey Vakulenko, a senior fellow at the Carnegie Russia Eurasia Center, wrote after the Kapotnya strike that the attack “showed that not even the heavy air defenses around Moscow can stop drones getting through.” That vulnerability has strategic implications beyond the immediate fuel shortages. If Ukraine can hit Moscow’s refineries at will, it can target other critical infrastructure as well. The logistics of supplying Russian forces in occupied Ukraine grow more complicated by the week.
Ukraine’s defense minister has described the campaign as a “logistics lockdown” for Russian forces. President Zelensky has framed it in even broader terms. “Each of our long-range sanctions means fewer resources serving Russia’s war machine,” he said after recent strikes, “and another step toward peace.”
Whether that peace arrives through negotiation or continued attrition depends on whether the Kremlin can be convinced that the costs of continuing the war exceed any possible gains. The fuel crisis creates that pressure. The question is whether Putin will feel it before Ukraine’s deep-strike campaign does more damage than the Russian economy can absorb.