Russia's War Economy Feels the Squeeze: Oil Refineries Hit, Labor Vanishes

Russia's War Economy Feels the Squeeze: Oil Refineries Hit, Labor Vanishes Russia's economy is weathering the strain of its war in Ukraine, but a slow-burning crisis fueled by Ukrainian drone strikes and a hemorrhaging workforce is gradually weakening its financial foundations, according to a leading economist. Specialist Vladislav Inozemtsev argues that despite predictions of collapse, the Russian economy is being propped up by high global prices for its crude oil [125622]. This revenue provides a critical "oil windfall" that funds military production and social spending, preventing an immediate economic disaster [125622]. However, this stability is under direct attack. A sustained Ukrainian campaign targeting Russia's oil refining infrastructure is creating a major long-term vulnerability [125622]. These strikes degrade Russia's capacity to process crude oil into more valuable fuels like gasoline and diesel, which threatens to cut into a vital stream of export revenue [125622]. Simultaneously, the nation is grappling with a severe labor shortage. The mobilization of hundreds of thousands of men for the military, combined with a significant exodus of workers fleeing abroad, has left factories and businesses struggling to operate [125622]. This scarcity is driving up wages and crippling productivity across the civilian economy [125622]. Inozemtsev concludes that while a sudden, dramatic implosion is not the most likely scenario, the Russian economy is being systematically degraded [125622]. The combined pressures of targeted strikes on energy infrastructure and a shrinking workforce are imposing a slow, deep crisis [125622]. He emphasizes that the ultimate outcome of the conflict will be decided by military success on the battlefield, but the economic costs for Russia are mounting and structural [125622]. Russian Economy Under Siege: Economist Says No Collapse, But War Will Be Decided on Battlefield