Russia Energy Monthly: Nuclear Renaissance vs. Oil Crisis — A Divergence of Trajectories

Bottom Line

June 2026 recorded a structural divergence in the Russian energy sector: nuclear generation and renewables received unprecedented state support and long-term contracts, while the oil and gas downstream faced a triple blow — a drop in global oil prices due to the unblocking of the Strait of Hormuz, a systemic fuel deficit on the domestic market, and ongoing drone attacks on refineries. Investors should increase allocation to securities linked to Rosatom and nuclear equipment suppliers, as well as to the RES and distributed energy segment, while simultaneously reducing positions in independent oil refiners and crude oil exporters, hedging the risks of declining oil prices through futures or long positions in ruble-denominated OFZs.

Month in Review

June was the month when two opposing vectors in Russian energy finally took shape. On the one hand, the nuclear industry is demonstrating a confident renaissance: the start of construction of a nuclear power plant in Uzbekistan, the signing of an agreement with Laos, the announcement of the construction of 40 new power units, and record output. The state is purposefully supporting this segment — from extending the OFAC sanctions license to direct investment decisions. At the same time, the renewable energy sector is becoming more active: a law on microgeneration was adopted, large-scale competitive selections were announced in the Far East, and new solar and wind power plants were launched.

On the other hand, the oil and gas sector has entered a zone of turbulence. Drone attacks on refineries led to a 25% drop in gasoline output and a fuel deficit of 20–25% in southern Russia and Crimea. The government is considering a complete ban on diesel exports and importing gasoline from India. Against this backdrop, the fall in global oil prices after the unblocking of the Strait of Hormuz dealt an additional blow to budget revenues and the free cash flow of oil companies. The EBITDA of medium-sized oil companies in May fell by more than 40%.

Thus, the month was marked by a "major fork": strategic investments are concentrating in nuclear and RES, while oil and gas refining and exports are becoming a high-risk zone. Investors need to adapt their positioning to this new landscape.

Trajectory Analysis

Month-over-Month Change: Compared to May, the overall picture worsened for the oil and gas sector (falling prices, infrastructure attacks, domestic deficit) and sharply improved for the nuclear industry and RES due to legislative initiatives and state support. The divergence trajectory of the two sub-sectors became the key month-over-month change.

Key Developments

1. Construction of 40 new nuclear power units announced (Week 4) — The government confirmed its strategic focus on nuclear energy, planning the construction of nearly 40 units with a capacity of 30 MW each. This creates a long-term order for Rosatom and related suppliers for decades to come. Portfolio implication: Increase share in bonds and stocks of Rosatom and its contractors; expected reduction in cash flow volatility due to the long order cycle.

2. Start of construction of an integrated nuclear power plant in Uzbekistan (Weeks 1-2) — Presidents Putin and Mirziyoyev launched the project in the Jizzakh region, including two III+ reactors of 1000 MW each and two small units of 55 MW each. The project has entered an active phase according to IAEA standards. Portfolio implication: Strengthening Rosatom's export portfolio increases the predictability of foreign currency revenue; positive for nuclear sector securities.

3. Fuel crisis in the Russian Federation: gasoline deficit of 20–25% due to UAV attacks, government prepares imports from India and a ban on diesel exports (Week 4) — Gasoline output fell by 25%, the deficit reaches 20%. Deputy Prime Minister Novak allowed for a complete ban on diesel fuel exports. At the same time, prices for LPG and fuel oil are rising. Portfolio implication: Negative for margins of independent refineries; positive for retail chains with fixed margins. Avoid refiner securities; consider hedging through short positions on the ruble or petroleum product futures.

4. Fall in global oil prices after the unblocking of the Strait of Hormuz (Week 4) — Analysts note that the price shock outweighs the damage from infrastructure attacks. Budget revenues from oil and gas are critically declining. Portfolio implication: Pressure on the ruble and oil and gas taxes; reduction in free cash flow for VINKs. Hedging through short positions in oil futures and long positions in ruble-denominated OFZs is recommended.

5. State Duma adopted a law on stimulating microgeneration based on RES (Week 3) — The law simplifies the installation of solar panels and other microgeneration facilities in apartment buildings, expanding the distributed energy market. Portfolio implication: Increase exposure to companies producing equipment for microgeneration (inverters, panels, energy storage systems). Demand for such products will rise sharply.

6. Extension of OFAC license for transactions with Russian banks for civil nuclear energy until December 18, 2026 (Week 2) — The US Treasury confirmed the possibility of international settlements for nuclear contracts, reducing the sanctions discount for Rosatom. Portfolio implication: We recommend increasing the share of bonds of nuclear companies with a fixed coupon; reduction of regulatory risk in international payments.

7. Ukrainian drone strikes on refineries led to a 34% reduction in Russian oil exports and a loss of $18 billion in revenue (Week 3) — For the period June–December 2025 and the first 4 months of 2026, exports remain 34% below the forecast. Attacks continue to damage refining infrastructure. Portfolio implication: Reduce stakes in oil companies with a high share of crude oil exports, especially those tied to ports and refineries. Hedge through futures on Urals or Brent.

Risk Evolution

Risks That Materialized:

• Systemic attacks on refineries led to a measurable 34% reduction in oil exports and a fuel deficit in southern Russia.
• The fall in global oil prices after the unblocking of the Strait of Hormuz materialized as a stronger negative for the budget than assumed at the beginning of the month.
• The fuel crisis on the domestic market escalated into a 20–25% deficit and required emergency government intervention.

New Emerging Risks:

• Risk of a complete ban on diesel fuel exports (being discussed at the Deputy Prime Minister level).
• Risk of import dependence: the government is considering mass imports of gasoline from India, which could change the structure of the domestic market.
• Risk of further decline in oil budget revenues due to a structural price decrease following the unblocking of the strait.

Sector Pulse (Monthly)

Outlook: Next Month

Key catalysts to watch:

• Government decision on a full or partial ban on diesel fuel exports and import supplies of gasoline from India.
• Dynamics of Urals and Brent oil prices amid stabilization of the situation with the Strait of Hormuz.
• Results of the competitive selection of RES projects in the Far East (capacity ~1.6 GW) — announcement of winners.
• Further attacks on Russian refineries and market reaction to possible supply disruptions.
• Detailing of the government plan for the construction of 40 nuclear power units: financing schedule and distribution among contractors.

Positioning recommendation: Priority — long positions in stocks and bonds of companies related to the nuclear industry (Rosatom, suppliers of reactor equipment and fuel), as well as in RES operators and manufacturers of equipment for microgeneration and energy storage. Reduce positions in independent refineries and crude oil exporters; hedge oil risk through short Brent/Urals futures or long ruble-denominated OFZs. Consider defensive positions in fuel retail companies with fixed margins. An expected correction in oil and gas majors could become an entry point only after stabilization of the fuel market.