Billions down the drain

Major attack causes Russian oil exports to plummet

Attacks on energy infrastructure are a daily occurrence in the war in Ukraine.(Bild: AP/AP ( via APA) Austria Presse Agentur)

After Russia appeared to be the big winner of the war in Iran, Moscow has now suffered a major setback: Following Ukrainian drone strikes, an attack on an oil pipeline, and the seizure of tankers, at least 40 percent of Russian oil exports have been halted for the time being ...

According to Reuters, citing its own calculations based on Wednesday’s market data, around two million barrels per day are affected by the disruptions. 

Moscow benefited financially from the Iran war
As a result of the Iran war, the global oil supply is unstable. The International Energy Agency (IEA) described it in the middle of the month as the “largest supply disruption in the history of the global oil market.” This played right into Moscow’s hands. The U.S. even lifted sanctions against Russia to boost the flow of oil—which poured billions into Vladimir Putin’s war chest.

But in recent days, Ukraine has landed some serious blows: This is the most extensive disruption of oil supplies in Russia’s recent history, as the world’s second-largest oil exporter. Oil production is one of the main sources of revenue for the state budget and is of central importance to the country’s economy.

In March, Ukraine intensified its drone attacks on oil infrastructure, striking the three most important western export ports: Novorossiysk on the Black Sea, and Primorsk and Ust-Luga on the Baltic Sea.

The terminal in Novorossiysk, which can handle up to 700,000 barrels per day, has been shipping less oil than planned since a severe Ukrainian drone attack earlier this month.

Russians Criticize “Terror”
By targeting pumping stations and refineries, Ukrainian strategists aim to reduce Russian oil and natural gas revenues, which account for about a quarter of the national budget. Russia has labeled the targeted Ukrainian attacks as terrorism and has tightened security measures across its eleven time zones.

The shutdown of the Druzhba pipeline, which runs through Ukraine, is also a blow to Russia. Ukraine has allowed deliveries to continue so far, as it is bound by international transit agreements. According to Ukraine, part of the pipeline was damaged by Russian attacks in late January. Slovakia and Hungary, which have been receiving oil from Russia via this pipeline, have called on Ukraine to immediately resume deliveries.

In addition to the drone attacks, seizures of tankers linked to Russia in Europe are reducing Arctic oil exports from the port of Murmansk by 300,000 barrels per day, according to trading circles.

Russian oil exporters are therefore attempting to focus on Asian markets. However, according to traders, established routes to this market have only limited capacity. Nevertheless, Russia continues to supply approximately 1.9 million barrels per day to China without interruption, including via the Skoworodino-Mohe and Atassu-Alashankou pipelines as well as by sea from the port of Kosmino. In addition, about 250,000 barrels are shipped daily from Sakhalin in the Far East, and around 300,000 barrels are delivered to refineries in neighboring Belarus.