Russian oil exports severely impacted by Ukrainian drone strikes
What's the story
Russia's major oil export terminals at Ust-Luga and Primorsk have been rendered inoperable for the second consecutive week. The disruption comes after a series of Ukrainian drone attacks targeting port infrastructure. The attacks, which started in March, have forced Russian refineries to seek alternative export routes. At least five strikes on Ust-Luga were reported over a 10-day period.
Production impact
Potential reduction in oil production
The export restrictions and disruptions at major refineries could potentially reduce oil production in Russia. Traders have reported that refineries have been unable to deliver diesel fuel to Primorsk for export since March 22. This has left refineries in European Russia and Siberia without their primary export route, further complicating the situation.
Transport changes
Refineries exploring alternative routes
In light of these disruptions, refineries are considering more expensive rail transport routes to other export terminals. Those that usually send deliveries to Ust-Luga are now looking at Vysotsk, further north on the Gulf of Finland, or Taman on the Black Sea coast. However, traders have warned that Vysotsk has a smaller handling capacity, and shipping to Taman would require ensuring larger numbers of rail cars.
Shipping decline
Significant decline in shipments
Finnish maritime officials revealed that shipments from Primorsk and Ust-Luga have drastically declined. They now only involve individual vessels, a far cry from the usual weekly average of 40 to 50. This decline further underscores the impact of drone attacks on Russia's oil export capabilities.