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The amount of Russian oil refining capacity that has been taken offline due to Ukrainian drone strikes is 14% of Russia’s total refining capacity, according to Reuters calculations.
Calculations show that 900,000 barrels per day of refining capacity has been taken offline by drone strikes, Reuters said on Tuesday. This includes Lukoil’s Norsi and Volgograd refineries, and Rosneft’s Kuibyshev and Ryazan refineries, among others.
Ukraine has stepped up its drone attacks on Russian refineries in recent weeks, which have reduced Russia’s overall refinery capacity, cutting into Russia’s refinery output, including gasoline and diesel production for its own domestic market.
The United States has urged Ukraine to stop its attacks on Russia’s refineries on concerns that any Russian retaliation could result in a spike in crude oil prices. Rising crude oil prices, which leads to higher gasoline prices, are problematic for sitting U.S. presidents in election years.
Brent crude oil prices are up almost $5 per barrel from this same time last month—the highest level in nearly five months— partially buoyed by Ukraine’s strikes and continued concerns with safe oil shipments through the Red Sea as the Houthis target vessels.
JP Morgan had estimated earlier that Russia’s refinery capacity outages could add a significant risk premium to the middle distillates market, banking on it taking weeks or even months to restore the capacity. Bank analysts have estimated that risk premium at $4 per barrel.
Analysts have predicted that Russia’s crude oil production will fall in the second quarter as a result of the refining capacity outages, as Russia’s oil storage capacity is already quite tight.
Brent crude oil was trading down on Tuesday afternoon at $86.11 per barrel.
