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The Cost of Industrial Destruction: Evidence from Ukrainian Strikes on Russian Refineries

Author

Listed:
  • Mikula, Stepan

    (Masaryk University)

  • Sabatini, Fabio

    (Sapienza University of Rome)

Abstract

We study the local economic effects of Ukrainian long-range strikes on Russian oil refineries, combining a verified event-level strike record with quality-screened daily satellite radiance from NASA Black Marble. The analysis covers 29 large Russian refineries, 22 of which sustain verified direct hits over June 2022-May 2026. Using a monthly staggered difference-in-differences design, we find that nighttime radiance falls immediately and persistently after a refinery enters the strike campaign: by roughly 30 percent in the innermost measured ring and by 15-18 percent within five kilometers, with the effect attenuating until it becomes small at twenty-five kilometers. A complementary daily instrumental-variables design uses directional wind alignment to shift strike incidence and trace the strike-day dynamic. Radiance rises at short horizons, consistent with a fire-related light signature corroborated by NASA FIRMS detections, and turns negative at a six-month horizon, with weak-instrument-robust inference. Applying the same satellite product and empirical specification to 106 non-refinery deep-strike targets produces no comparable contraction, weighing against a generic-war-disruption interpretation.

Suggested Citation

  • Mikula, Stepan & Sabatini, Fabio, 2026. "The Cost of Industrial Destruction: Evidence from Ukrainian Strikes on Russian Refineries," IZA Discussion Papers 18772, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp18772
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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