Ukraine Drone Attacks Could Force Russia to Cut Oil Production

Russia’s oil producers may have to reduce output as intensified Ukrainian drone attacks have damaged critical export and port infrastructure.

State pipeline firm Transneft, which handles more than 80% of all the crude oil pumped in Russia, has warned producers that it may have to accept lower volumes on its system, industry sources close to Russian oil producers told Reuters on Tuesday.

Transneft has already restricted in recent days the storage options on the system for the producers, according to the sources.

The reason is the intense Ukrainian drone attacks that have damaged refineries and export facilities in recent weeks.

Russia has not commented on the extent of the damage, but various reports have said that at least 10 refineries have been targeted with drones by Ukraine, and some of them have sustained damages and had to temporarily halt crude intake.

Early this month, the Ryazan refinery in the region southeast of Moscow was targeted. The facility is operated by oil giant Rosneft and is one of the biggest crude processing plants in Russia with a capacity to process more than 260,000 barrels per day (bpd) of crude—or 5% of Russia’s refining capacity.

Ukrainian drones have also caused various degrees of damage at the fuel loading and gas processing complex at the Ust-Luga port on the Russian Baltic Sea. Repairs at the most seriously damaged unit at Ust-Luga could take up to six months, according to reports.

Last week, Ukraine attacked one of the most important oil export ports, Primorsk, with drones, causing damage to the Baltic Sea port and disrupting shipments at the terminal, which has the capacity to handle 1 million barrels of crude daily. Two Aframax tankers, the Kusto and the Cai Yun, were damaged alongside onshore pumping equipment at Primorsk. The Ukrainian attack on Primorsk was the first strike on the port since the war began in early 2022.

By Charles Kennedy for Oilprice.com

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