Fuel Price Collusion: Is Russia Heading for a Fuel Crisis?

Liberal commentators exclusively blame drone attacks. The vast majority of liberal commentary offers a single explanation: drones destroyed refineries, causing output to fall and prices to rise. At first glance, this logic appears sound—but it explains only the crisis’s trigger, not its root cause. If drones were truly the fundamental cause, why had the government already imposed multiple gasoline export bans before the wave of drone strikes? Why was the buffer subsidy mechanism established long before the war? Why has the Federal Antimonopoly Service consistently monitored fuel trade and regularly launched monopoly investigations? Why are exchanges mandated to supply minimum volumes? Why does the government convene special summer meetings every year dedicated solely to stabilizing fuel markets? Fuel shortages and soaring prices are not new phenomena emerging in 2026 or after the outbreak of war: regional fuel shortages occurred in 2011; price-control agreements between the government and oil companies were signed in 2018; and a comprehensive ban on gasoline exports was introduced in 2023—none of these crises involved drone attacks. Regardless of global oil prices or geopolitical conflicts, Russia’s fuel market experiences cyclical turbulence—indicating that the root cause lies in deep-seated internal structural contradictions, not external shocks. A classic pitfall of liberal analysis is conflating triggering events with underlying contradictions. Consider an old house with cracked foundations: heavy rain collapses a wall—the immediate cause is rainfall, but the fundamental problem is the building’s pre-existing structural decay. Drone strikes have intensified market pressure, raised operational costs, and temporarily constrained supply—but they cannot generate the fundamental supply-demand antagonism. Even industry media outlets (e.g., Forbes) acknowledge that price hikes often precede actual physical shortages; market speculation and panic-driven expectations are the real drivers of inflation. This reveals that the core contradiction resides in the circulation and distribution环节—not merely in production. Staying at the surface level of isolated incidents will never reveal the essence. War and the Strait of Hormuz conflict act merely as catalysts—amplifying the pre-existing tension between “public demand for affordable fuel” and “capital’s pursuit of export windfalls.” The root of this contradiction lies embedded in Russia’s domestic oil-and-gas market ownership structure. From Public Asset to Oil Oligarchs To understand today’s fuel crisis, one must revisit the industry’s transformation three decades ago: the privatization of Soviet-era public oil and gas assets. Strategic resources originally intended to serve the national economy were transformed into instruments for private enrichment. Today’s media glorifies oil companies’ “efficient management” and “market competition,” deliberately obscuring their origins: neither Rosneft, Lukoil, Surgutneftegas, nor Gazprom Neft built their operations from scratch—they all inherited the Soviet Union’s decades-long investments in exploration, pipelines, refineries, research institutes, and oilfield cities. The West Siberian development project ranked among the largest infrastructure undertakings of the 20th century: massive state funding went into geological surveys, road construction, pipeline laying, and urban development—millions of workers, geologists, and engineers labored across generations to build a complete oil-and-gas industrial chain. Under the planned economy, oil served industry, agriculture, transport, and daily life as a public resource—not a vehicle for private profit. Oil plants and fields belonged collectively to the people; ownership was unambiguous. Within just a few years after the USSR’s collapse, core oil-and-gas assets nationwide underwent large-scale privatization. Official rhetoric cited “market activation” and “foreign investment attraction,” but the reality was the division of public wealth among former Soviet economic bureaucrats, financial conglomerates, and emerging oligarchs. The Surgutneftegas Case A top-tier Soviet oil-and-gas conglomerate, Surgutneftegas employed tens of thousands of workers developing oilfields and constructing pipelines across frigid Western Siberia.

Introduction to Lukoil

Lukoil (PJSC Lukoil) is one of the world’s largest vertically integrated oil and gas companies. Its core businesses include the exploration and production of oil and natural gas, as well as the production and sale of petroleum and petrochemical products. Its upstream operations are primarily conducted within Russia, with Western Siberia serving as its principal hydrocarbon base. Lukoil markets its petroleum products internationally—in Russia, Eastern Europe, the Commonwealth of Independent States (CIS), and the United States. Company Profile PJSC Lukoil Holdings was founded in 1991 through the merger of three major oil-and-gas producers: Western Siberia, Kogalymneftegaz, and Kogalymneftegaz. The company operates projects across 55 of Russia’s 89 federal subjects and markets refining equipment, operates refineries, and maintains an extensive retail network in numerous countries and regions. By proven hydrocarbon reserves, Lukoil ranks as the world’s second-largest privately owned oil company. It holds approximately 1.3% of global oil reserves and accounts for roughly 5.1% of worldwide oil production. Lukoil plays a pivotal role in Russia’s energy sector—contributing 36% of the country’s total oil production and 48% of its oil refining capacity. As of early 2009, its proven oil reserves stood at 32.691 billion barrels, with natural gas reserves totaling 38 trillion cubic feet; its total hydrocarbon reserves amounted to 45.5 billion barrels of oil equivalent. In exploration and production, Lukoil possesses high-quality, diversified assets. Its primary oil-producing region remains Western Siberia, while the Timan-Pechora region has emerged as its fastest-growing area—where oil output increased by over 1.6 times. Lukoil also pursues exploration and production projects abroad, including in Kazakhstan, Egypt, Azerbaijan, Uzbekistan, Saudi Arabia, Iran, Colombia, Venezuela, and Iraq. At the Nakhodka field, the company has launched a natural gas production program, promising rapid medium-term growth in gas output. The Greater Kheta Basin and the Caspian Sea will serve as key energy bases for this initiative. Internationally, Lukoil’s gas projects include the Kandym–Khauroz–Shad project in Uzbekistan and the Shah Deniz project in Azerbaijan. Lukoil maintains strong refining capabilities both domestically and internationally. Within Russia, it operates four major refineries located in Perm, Volgograd, Ukhta, and Nizhny Novgorod, plus two smaller refineries. Its domestic refining capacity totals 41.8 million tons per year. Its overseas refineries are situated in Ukraine, Bulgaria, and Romania, with combined refining capacity reaching 16.7 million tons annually.

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