At least 40% of Russia‘s oil export capacity is at a halt following Ukrainian drone attacks, a disputed attack on a major pipeline and the seizure of tankers, according to Reuters calculations based on market data.
The shutdown is the most severe oil supply disruption in the modern history of Russia, the world’s second largest oil exporter, and has hit Moscow just as oil prices exceeded $100 a barrel due to the Iran war.
Russia’s oil output is one of the main sources of revenue for the national budget and is central to the $2.6 trillion economy.
An oil tanker moored in Novorossiysk, Russia, in 2022.AP
Ukraine intensified drone attacks on Russia‘s oil and fuel export infrastructure this month, hitting all three of Russia‘s major western oil export ports, including Novorossiysk on the Black Sea and Primorsk and Ust-Luga on the Baltic Sea.
According to Reuters calculations, about 40% of Russia‘s crude oil export capabilities — or around 2 million barrels per day, were shut as of Wednesday after the most recent attack.
That includes Primorsk and Ust-Luga as well as the Druzhba pipeline, which runs through Ukraine to Hungary and Slovakia.
Kyiv has also targeted pipeline oil pumping stations and refineries. Kyiv says it aims to diminish Moscow’s oil and gas revenue, which accounts for around a quarter of Russia‘s state budget proceeds, and weaken its military might.
Russia says the Ukrainian strikes are terrorist attacks and has tightened security across its 11 time zones.
Firefighters extinguish a blaze at a chemical transport terminal at Russia’s Ust-Luga port on Jan. 21, 2024. Local media reported that Ukrainian drones attacked the port.Telegram Channel of head of the Kingisepp district via AP
Ukraine said that part of the Druzhba pipeline was damaged by Russian strikes at the end of January, while both Slovakia and Hungary demanded Kyiv restart the supplies immediately.
The Novorossiysk oil terminal, which can handle up to 700,000 bpd, has been loading oil below plan since damage from a heavy Ukrainian drone attack early this month.
In addition, frequent seizures of Russia-related tankers in Europe have disrupted 300,000 bpd of Arctic oil exports flowing from the port of Murmansk, traders said.
With its westward export routes under fire, Moscow must rely on oil exports to Asian markets, but those routes are limited due to capacity, traders said.
Russia continues uninterrupted supplies via pipelines to China, including the Skovorodino-Mohe and Atasu-Alashankou routes, as well as ESPO Blend exports by sea via the port of Kozmino.
Together, the three routes account for some 1.9 million bpd of oil.
Russia also continues to load oil from its two far eastern Sakhalin projects, shipping about 250,000 bpd from the island.
Traders also say that Russia is supplying the refineries in neighboring Belarus with around 300,000 bpd of oil.