To be clear, this isn’t an end of oil exports, just refined fuels. The bottle neck in oil refining will probably result in more oil exports, which will still provide revenue. The key thing is that they’re getting pushed down the value chain, making less money on every barrel pumped. On top of that, they are being forced to sell the oil at a discount because the pool of countries willing to buy from them is restricted, and thus those countries can demand a lower price.

That foreign income is important because it is paying both for imports for the war effort, but also for imports of consumer goods. They have to scale back one or the other. One diminishes their capacity to fight, the other increases the internal unrest with the war.

If their refining capacity is reduced enough, they might actually have to start importing refined oil products, both for consumer/industrial needs, and for military needs. Decreasing their ability to import other goods.

Over all, it’s constricting their ability to mollify the relevant domestic populations AND maintain the war effort at the current level.

I think the provocative actions against NATO countries is them trying to create a situation that justifies them shifting more resources from the consumer goods side to the war effort side, ether by further mobilization of conscripts (less money on contract soldiers, thus less competition for imported goods) or by politically justifying drops in standard of living (less domestic consumption of imported consumer goods).