Ukraine’s long-range drones reshape NATO spending priorities

Ukraine has intensified long-range drone attacks on Russian oil infrastructure and military targets, adding pressure on Moscow’s energy system and drawing NATO investment toward drone defense. The alliance plans to put more than $40 billion into counter-drone capabilities over five years, according to NATO Secretary General Mark Rutte.

The campaign reached deep into Russian territory this week when smoke rose from an oil refinery in Omsk, a Siberian city about 2,500 kilometers, or 1,553 miles, from Ukrainian territory and near Russia’s border with Kazakhstan. Ukrainian President Volodymyr Zelenskyy said on X that Ukraine’s improved drone capabilities had brought Siberia within range.

Reuters identified images of a fire at the Omsk refinery after the regional governor said the province had been attacked by Ukrainian drones. Kyiv has targeted refineries and fuel facilities as part of an effort to reduce Russian energy revenue, according to CNBC.

How Ukraine extended its strike range

Bob Tollast, a research fellow in land warfare at the Royal United Services Institute in London, told CNBC that Ukraine’s ability to strike farther into Russia reflects improvements in production, inertial navigation, software and machine vision. Those tools help drones continue toward targets when satellite navigation is disrupted by jamming.

Foreign assistance has also probably contributed, Tollast said, while noting that refineries and terminals present large targets. He said Russia has had only limited success using nets and drone interceptors against Ukrainian systems, and has placed air-defense assets on towers and tall buildings.

Tollast also pointed to Ukraine’s domestically produced cruise missiles, including Flamingo, as a further complication for Moscow, saying they had been used against industrial sites, including facilities linked to air-defense production. He cautioned, however, that it may be too soon to judge whether refinery strikes will cause durable damage, because Russia’s refining sector has long maintained spare capacity.

Russia has also expanded its own drone production and woven drones more closely into its military operations, according to CNBC.

NATO shifts procurement focus

Rutte said Tuesday that drones had changed the nature of warfare and had become a decisive battlefield factor, citing the Russia-Ukraine war. He announced NATO Drone Edge, an initiative intended to build what he called a “drone-ready Alliance” by applying lessons from Ukraine and investing in transatlantic defense industries.

The planned spending highlights how low-cost autonomous and semi-autonomous systems are challenging traditional defense procurement. Drones can be produced and modified quickly, then adapted based on battlefield feedback, shortening development cycles that often take legacy defense contractors years.

Ulrike Franke, a senior policy fellow at the European Council on Foreign Relations, told CNBC that Ukraine has gained leverage because it has become strong in drones, counter-drone systems and data on fighting Russian forces. Security analysts and political leaders have increasingly described Ukraine as a contributor of military expertise to NATO and the European Union, rather than only a recipient of support.

Morningstar analyst Loredana Muharremi told CNBC that Ukraine became a leading drone warfare operator out of necessity because it faced a larger and better-equipped military. She said the major innovation was not only the aircraft, but the way Ukraine buys and fields them, with close cooperation among the military, domestic startups and private industry.

Muharremi said the financial effect for defense companies is expected to appear first in order intake and backlogs over the next two to three years, with a larger effect on revenue and earnings from 2028 onward.

Escalation risks remain

Defense analysts cited by CNBC said Ukraine’s drone campaign has helped slow Russia’s battlefield momentum, while also increasing the risk of escalation as strikes reach farther into Russian territory.

Finnish President Alexander Stubb told CNBC that Zelenskyy now has the capacity to conduct long-range attacks using drones and missiles against Russian oil refineries. Stubb said those strikes were reducing Russia’s ability to produce and export by 40%, and said public sentiment inside Russia was shifting against the war.

Stubb added that Ukraine still needs air defense to support its war effort. U.S. President Donald Trump held separate calls with Russian President Vladimir Putin and Zelenskyy over the weekend and said Monday that a resolution to the conflict was “getting closer than people realize.”

This story draws on original reporting from CNBC.