Russia returns to Soviet-style state planning for gasoline as drone strikes cripple refineries

The Russian government is returning to Soviet-era state planning practices for gasoline production in response to continuous Ukrainian drone attacks targeting the country’s refinery infrastructure.

The strikes, which disabled approximately 20% of Russia’s refining capacity last year, have led to the suspension of operations at five major facilities within the past month alone.

According to sources familiar with the matter cited by the Interfax news agency, the Russian Ministry of Energy will begin issuing mandatory directives to oil companies regarding production volumes, domestic market supplies, export quantities, and sales figures on the commodity exchange.

These instructions, referred to as “raznaryadka”—a term used for state allocation orders during the Soviet period—will cover the production of Class 5 gasoline and diesel fuel. The agreements between oil companies and the ministry are expected to take effect following a formal government decree and will remain in force through the end of 2026.

Under the new system, retail prices at filling stations will be placed under rigorous state supervision. Oil companies will commit to maintaining price increases within the limits of official inflation, even when accounting for increases in Value Added Tax (VAT) and excise duties.

The implementation and operation of this system will be overseen by the Ministry of Energy and the Federal Antimonopoly Service (FAS).

Last year, Ukrainian drones launched at least 80 attacks on Russian refineries, resulting in a 23% idle rate for total refining capacity—the highest level in the country’s history.

The disruptions led to gasoline shortages across a vast geographical area stretching from Kamchatka to Russia’s central regions, prompting discussions in some provinces regarding the introduction of fuel rationing. By September, fuel prices at the pump had increased by 12.7% year-on-year, marking a 14-year record.

While the rate of price increases slowed to 10.8% toward the end of the year, it remained nearly double the official inflation rate of 5.6% reported by Rosstat.

Since the beginning of 2024, Russian refineries have been the targets of drone strikes at least 12 times. Within the last month, five of the nation’s largest facilities were forced to halt production.

These facilities include the Kinef refinery in the Leningrad region, Russia’s second-largest plant with an annual capacity of 20 million tons; the 17-million-ton capacity Nijegorodinefteorgsintez plant; and the Novokuybishevsk, Saratov, and Tuapse refineries.

The resulting production cuts have triggered a new wave of price increases on the commodity exchange. Since the start of the year, the price of Ai-92 grade gasoline has risen by 22%, while Ai-95 grade has increased by 21%.

In response to these developments, the government reinstated a ban on gasoline exports effective April 1, just one month after a previous restriction had been lifted.

According to Interfax, oil companies will commit under the new ministerial agreements to fulfill production and shipment targets “within the limits of production and logistical capabilities.” Companies will only be permitted to request adjustments to these state-mandated plans in cases of “force majeure.”