Russia Has Faced A Sharp Drop In Oil Production
- 10.09.2026, 21:43
The Ukrainian strikes on the oil refinery “helped.”
Russian oil companies have been cutting production for the ninth consecutive month following a series of Ukrainian strikes on refineries, which have driven the country’s oil refining output to a two-decade low.
In August, oil production in Russia fell to 8.72 million barrels per day, marking the sharpest monthly decline in more than a year—a drop of 160,000 barrels per day, according to Bloomberg citing OPEC+ data.
Compared to December, when production in Russia began to decline, oil output has fallen by 660,000 barrels per day, and current production levels are 1.17 million barrels per day below the OPEC+ quota.
“The increasingly frequent and effective drone strikes on Russia’s oil and gas infrastructure are affecting not only refineries but also the oil production sector,” notes Daria Melnik, vice president of Rystad Energy. Due to refinery downtime, oil refining volumes in Russia have fallen by 30%, leaving approximately 1.7 million barrels of daily production surplus.
The inability to export all of this oil and limited storage capacity are forcing oil companies to shut down wells, Rystad emphasizes. According to government estimates, oil production in Russia this year will hit a 17-year low of 494.2 million metric tons.
Russian oil production will continue to fall through 2027, Rystad forecasts, to 8.6 million barrels per day. A significant portion of the country’s oil production capacity comes from old, depleted fields that were brought online during the Soviet era. The longer such wells remain inactive, the greater the likelihood that it will no longer be possible to restore them to their former capacity, Rystad explains. At the same time, some wells may be lost forever, as the costs of repairing and restarting them will become economically unfeasible.
Since its post-Soviet peak in 2019 (11.2 million barrels per day), oil production in Russia has already fallen by more than 20%. And overall, “the oil industry has found itself in a zugzwang,” says Sergey Vakulenko, a research fellow at the Carnegie Berlin Center.
Oil production in Russia will decline slowly but steadily in the near future—at a rate of about 3% per year, according to Vakulenko: “Maintaining production levels or increasing them is possible only by bringing online reserves with a full-cycle technical cost of more than $35–40 per barrel, for which the Russian oil industry currently lacks sufficient capital, nor does the state have the willingness to keep that capital in the industry.”
After the war with Ukraine, according to Vakulenko, Russia will likely find itself in the position of a pariah state, cut off from Western markets and technologies. “At the same time, it will quite possibly intensify its preparations for a possible future war with Ukraine, as well as for a new, indefinitely long period of military confrontation with Europe and an arms race with the United States. A decline in oil revenues will make the situation even more complicated,” the expert adds.