ByCharles Kennedy– Mar 03, 2025, 3:30 AM CST
A fire at the Ufa refinery in the Republic of Bashkiria has been extinguished, local authorities reported, with early reports suggesting the facility may have become the latest target of Ukrainian drone attacks.
A later update, however, had authorities report that the fire was caused by technical problems at the facility.
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Reuters reported that the refinery has a capacity of 168,000 barrels daily, with the bulk of the feedstock coming from the surrounding area in Western Siberia.
Authorities did not mention a drone attack, only reporting that the fire was the result of an explosion. Federal authorities, meanwhile, did not mention any drones getting shot down over Ufa, the Reuters report said.
Refinery fires in Russia have become cause for concern among oil traders as the Ukrainian army targets the critical infrastructure to disrupt the Russian energy industry. So far, there have not been any major disruptions in fuel export flows despite the need to shut down some refineries for repairs following the drone attacks.
Indeed, in January this year Russian refinery runs actually surged in response to the Biden administration’s last sanction push, which curbed exports of crude, leaving more of it at home. Over the first two weeks of the year alone, refinery runs rose by 2% or 108,000 barrels daily to a total of 754,800 barrels daily, Reuters reported in January.
Meanwhile, analysts polled by Reuters expect a well supplied oil market this year, barring a major supply disruption.
“Unless supply is severely disrupted, price spikes should remain capped by the vast scale of OPEC+ spare capacity – this is what happened in October 2024 during the latest flare-up of tensions between Iran and Israel,” the head of HSBC’s European oil and gas research, told Reuters.
The extended effect of Biden sanctions on Russia’s oil industry also appears uncertain in supporting prices, according to some analysts. According to one of them, “it is not clear if these sanctions alone are strong enough to keep prices elevated. The overall dynamic suggests that prices might further fall due to expected oversupply in the market.”
By Charles Kennedy for Oilprice.com
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