Weaponization Of Crude: Russian Oil Refiners Under Drone Attack
Brent crude prices climbed to their highest level in four and a half months last week following attacks on multiple Russian oil refineries by Ukrainian drones. Additionally, this morning, drone strikes on two more oil refining facilities were reported deep within Russia.
Bloomberg reports drone strikes targeted two oil refining facilities in Russia's Samara region, more than 620 miles from the Ukrainian border.
A petroleum product processing unit caught fire on the territory of the Rosneft PJSC oil refinery in Syzran, RIA Novosti reported, citing Dmitry Azarov, the region's governor. The plant's design capacity is 8.5 million barrels per year or about 170,000 barrels per day.
... other drones attacked the Novokuybyshevsk refinery, according to Russian media. -Bloomberg
Get ready to update your Russian oil refiners Bingo card! Syzran refinery, located 1000 km deep inside Russia, is currently offline. pic.twitter.com/fAtjga9xF0
— Maria Avdeeva (@maria_avdv) March 16, 2024
Russian Telegram channels report drone attacks on two enterprises at once in Samara region.
— Anton Gerashchenko (@Gerashchenko_en) March 16, 2024
Local residents say about explosions at the Syzran refinery. The area of fire is 500 square meters.
Other drones attacked the Novokuybyshevsk refinery, according to Russian media. pic.twitter.com/2uB0ILz26v
Ukraine has been ramping up drone attacks on crude processing facilities across Russia.
On Wednesday, Rosneft PJSC's Ryazan plant near Moscow was hit by a drone attack. This refinery is one of the largest in the country. A day earlier, Lukoil refinery in western Russia was hit by a drone attack.
BREAKING:
— Visegrád 24 (@visegrad24) March 13, 2024
Ukraine continues its latest campaign of drone strikes against critical infrastructure in Russia.
Just hours ago, Ukrainian drones struck on the largest oil refineries in Russia.
Rosneft’s Ryazan facility refines 17 million tons of oil a year pic.twitter.com/PaHPy9P4ij
The wave of drone strikes on Russian crude-processing facilities started in January, with full intentions by Ukraine to cripple the fuel supply that funds Moscow's war machine.
Here are the major Russian refineries that drones have targeted:
Last month, Ukraine's "drone czar," Minister of Digital Transformation Mykhailo Fedorov, explained to Reuters that its manufacturing base can produce thousands of drones capable of hitting targets at "300, 500, 700, and 1,000 kilometers."
The full extent of the damage caused by strikes this year isn't clear, but the attacks caused Msocow to place a six-month ban on gasoline exports starting on Mach 1.
This week, the Brent crude market wasted no time pricing increasing war risks by sending prices above $85 a barrel, the highest level since early November.
Despite two years of war and relentless attacks on Russian refineries, Moscow's energy industry has proved resilient, and flows have shifted from Europe to China and India at heavily discounted prices.
While Ukrainians target Russian refineries, David Asher, a senior fellow at Hudson Institute, recently penned a note that discusses the weaponization of crude could be the next big financial shock to the global economy.
Given the mounting risks in the Middle East, Asher said on slide nine, "Global oil shock could trigger a crisis like 2007-2008."
He also noted, "Iran is Preparing For Oil War: Markets Ignore Growing Risk."
Asher warned: It's only a matter of time before Iran-backed Yemen's Houthi rebels start targeting key oil facilities in Saudi Arabia.
A perfect storm of higher crude prices continues to brew as the world's refineries have become major targets.
