However, PIE experts believe that these incidents will not have a long-term impact on prices – crude oil has not been affected by attacks on a global scale. They emphasize that the main risk factor is the rather low level of global fuel stocks.
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Ukraine attacked Russian oil refineries. What were the consequences?
Analysts at the Polish Economic Institute (PIE) estimate this As a result of Ukrainian drone attacks in March, the total processing capacity of Russian refineries decreased by about 5%. (0.26 million barrels per day) compared to February 2024 Factories in Kirishy (Surgutneftegaz), Nizhny Novgorod (Nursi, owned by Lukoil) and Ryazan (Rosneft) suffered the greatest losses. As PIE notes, since the beginning of the war, nearly 30 drone attacks on Russian refineries have been recorded, including at least 9 attacks this year.
As a result, weekly exports of Russian oil products by sea fell by more than 40% in mid-March, or nearly 1 million barrels per day, compared to the end of February. “This means losses for Russian refineries amounting to at least $100 million per week” – experts calculate.
The production capacity of Russian refineries decreased by 7%.
The PIE report indicates that at the end of March 2024, as a result of the Ukrainian attacks, Russian refineries can process approximately 5.1 million barrels of oil per day. This is 7 percent. Below average for all of 2023, When it was 5.5 million barrels per day. We read: “According to Wood Mackenzie analysts, as much as 0.8 to 1 million barrels per day of refinery processing capacity may be shut down by the middle of this year due to necessary maintenance.”
As the authors point out, this situation can affect the global oil market only in the event of a permanent decline in exports of Russian oil products. However, economists at PIE expect the current outages to be resolved by May this year. They also point out that Russian refineries have not yet used their full capacity, and in 2024 they were supposed to process less than 90 percent. Your potential.
Prices will rise, but not because of Ukraine
According to the institute's experts, the March attacks on refineries will not translate into a permanent increase in oil prices on global stock exchanges. Despite market concerns and Moscow's rhetoric, Brent prices rose just less than 5% in March. Compared to the February average.
There was greater stability in the fuel market – with LSE gasoline futures rising in March by a nominal 0.2 per cent. MDM” – PIE Reports. However, the effects of the attacks were strongly felt at Russian stations, where mid-month gasoline prices fell by 20 percent, and diesel prices rose by up to 46 percent. “Higher than at the end of last year.” – They confirm.
PIE analysts expect that in the coming months, declining inventories in the United States and Europe will have a much greater impact on the increase in fuel prices than military actions. As they emphasize, the potential recovery of the global economy may increase demand for crude oil and petroleum products, which, in light of limited supply, may pose a risk of shortages and pressure on margins.
The United States was “banned” and Ukraine did not listen
Drone attacks on Russian fuel infrastructure in recent weeks have led to temporary supply disruptions and an increase in fuel prices in Russia. According to reports from the Financial Times, the United States expressed concern about these actions and called on Ukraine to stop them. The reason is Washington's fear of Russian retaliation and further turmoil in the oil market, which may also affect fuel prices in the United States in the period before the crucial elections.
The authorities in Kiev, despite declaring their understanding of the American position, stress that in the face of Russian aggression, they must use all available means to defend themselves. The attacks on vital elements of Russian infrastructure are aimed at impeding supplies for the Kremlin forces and reducing the income Moscow earns from the sale of raw materials. Experts point out that US pressure is a manifestation of a conflict of interests and shows that not only values are important in global politics, but also practical goals.
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