By Bloomberg News
The wave of Ukrainian drone attacks on Russian oil refineries threatens to disrupt global markets for petroleum products, the International Energy Agency said.
Ukrainian drones have stepped up attacks on Russia’s oil industry this year in an effort to disrupt fuel supplies to the military and curb the Kremlin’s revenues. About 500,000 to 600,000 barrels per day of the country’s processing capacity on a gross basis, before compensation, could be offline this quarter, according to the IEA’s monthly report.
The closure of damaged refineries or units for four to eight weeks for repairs “could mean a significant loss” of Russian oil products exports, the Paris-based agency said on Friday. International markets “rely on Russia’s exports of diesel, naphtha and jet fuel, while refining systems in Asia absorb significant amounts of the country’s direct and cracked residues to fuel commodity upgrading.”
The IEA reiterated an earlier statement by US Defense Secretary Lloyd Austin, who warned that Ukrainian attacks “could have a domino effect” on the global energy market.
So far, the actual decline in refinery runs has been much lower. Russia’s official weekly refinery production data through the end of March equates to 5 to 5.2 million barrels of crude oil per day, rather than the 4.6 million barrels per day that a bottom-up assessment of refinery outages would suggest. indicate, according to the IEA.
Some facilities in the country repaired damaged equipment relatively quickly. Only Rosneft PJSC’s Tuapse refinery near the Black Sea – which was attacked in late January – remains offline, but it is not clear whether that is due to the drone attack or initial planned maintenance. The IEA is likely to resume operations in mid-May, based on reports.
First print: April 12, 2024 | 2:16 PM IST