Ukrainian drone strikes hit the main artery of the Russian economy. The result: Russia has to limit oil production in refineries.
Moscow – The Ukraine war could cost Russia one of its most important resources: recent Ukrainian drone attacks on oil refineries have massively weakened oil production. The Ukrainians have repeatedly targeted large oil processing camps - apparently with success. According to the latest assessment by the International Energy Agency (IEA), Russia's economy could lose 500,000 to 600,000 barrels per day of crude oil processing capacity in the second quarter of 2024.
Russia's economy is facing massive losses in oil production
This is reported by
Bloomberg
and is based on the evaluation
IEA
.
Russia, as one of the world's largest oil producers, relies heavily on refining capacity. Russia has so far claimed that it has not stopped production at refineries despite Ukrainian attacks. Contrary to Russian statements,
Euronews
suspects in an article from the beginning of April that the Ukrainian attacks led to immediate production losses and caused problems in the companies.
Bloomberg
also
suspects that oil production in Russian refineries has already declined. Accordingly, refineries produced an average of 5.25 million barrels of oil per day in the first three days of April 2024. In April 2023 there were still 5.78 million barrels produced.
Consequences for Russia's economy: Oil production is likely to decline
Some of the refineries that were attacked were able to quickly resume production. Other oil facilities, such as the Ryazan refinery and the facility in the Nizhny Novgorod region, have had to
shift production to vacant or underutilized oil processing warehouses, according to
Bloomberg
and
Newsweek .
According to the IEA, Ukraine damaged 11 oil refineries in Russia through its attacks. If the refineries close for repairs for four to eight weeks after the attacks, this could also severely restrict deliveries of diesel and naphtha (crude gasoline) to international markets. “Russia’s oil refineries play a crucial role in the country’s economy and its global energy presence,” Elina Ribakova, director of the international program at the Kyiv School of Economics, told
Euronews.
Western sanctions are making oil transactions more difficult for Russia's economy
However, Russia doesn't just have problems producing oil. Due to Western sanctions, it is becoming increasingly difficult for Vladimir Putin to find buyers for Russian crude oil. So far, India has imported a large part of Russian oil, but after the sanctions were tightened, the trading partner distanced itself.
In addition to problems with the production and delivery of oil, Russia's economy could also face a shortage of gasoline. Prices rise and exports are restricted. According to media information, the Russian government largely banned the export of gasoline and diesel for six months at the end of February 2024.
Because of sanctions: Is Russia threatened with oil and gasoline shortages?
The export ban signed by Cabinet Chief Mikhail Mishustin is intended to compensate for the expected higher demand in the country itself, the Internet portal
RBC
reported in February, citing government circles. At the same time, oil companies will in future sell at least 16 percent of their diesel production on the Russian stock exchange.
According to RBC, prices on the Russian commodity exchanges for various types of gasoline and diesel have risen between 8 and 23 percent since the beginning of the year. The price increase has not yet reached the petrol stations. Russia is a significant player on world markets, particularly in diesel production. The EU banned the import of oil products from Russia last year. But at the same time, countries like Turkey and Brazil have bought significantly more diesel. (with material from dpa)