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

Štěpán Mikula and Fabio Sabatini ()
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Fabio Sabatini: Sapienza University of Rome

No 18772, IZA Discussion Papers from IZA Network @ LISER

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.

Keywords: conflict economics; industrial destruction; drone warfare; nighttime lights; staggered difference-in-differences; instrumental variables; Russia-Ukraine war (search for similar items in EconPapers)
JEL-codes: D74 F51 H56 L71 O13 (search for similar items in EconPapers)
Date: 2026-07
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