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Washington's Pleas Fall on Deaf Ears as Ukraine Strikes Russian Refineries

  • Biden's top officials have pleaded with Kyiv to stop attacks on Russia's energy infrastructure.
  • A source in the Ukrainian defense sector confirmed to AFP on Wednesday that Ukrainian drones had carried out attacks on oil infrastructure in the Smolensk region.
  • The Financial Times, citing unnamed US officials, recently said long-range drones have hit at least 20 energy facilities deep within Russia so far this year.
Refinery Russia

Just days after the Biden administration signed a new military aid package worth billions of dollars to Ukraine, Kyiv launched a series of suicide drone attacks on Russian oil refineries. Biden's top officials have pleaded with Kyiv to stop attacks on Russia's energy infrastructure because of the fears that turmoil in crude markets would send pump prices in the US higher ahead of the presidential elections in November. 

"Our region is again under attack by Ukrainian UAVs," Smolensk Governor Vasily Anokhin wrote in a post on Telegram on Wednesday. Kamikaze drones damaged oil facilities in western Russia. 

Another drone attack hit the Lipetsk region further south, which is home to steel production plants and pharmaceutical sites, Governor Igor Artamonov said.

"The Kyiv criminal regime tried to hit infrastructure in Lipetsk industrial zone," Artamonov said. 

The Moscow Times pointed out:

A source in the Ukrainian defense sector confirmed to AFP on Wednesday that drones in the service of the Security Service of Ukraine (SBU) had carried out the attacks.

The source made no mention of the attack on Lipetsk but claimed two oil depots were destroyed in the Smolensk region.

"Rosneft lost two storage and pumping bases for fuels and lubricants in the towns of Yartsevo and Rozdorovo," the source said, referring to the Russian state-controlled energy giant.

The Financial Times, citing unnamed US officials, recently said long-range drones have hit at least 20 energy facilities deep within Russia so far this year. Kyiv's drone attacks on Russia's energy complex have been frightening for the Biden administration, as Brent prices have risen to the $90/bbl level on higher war risk premiums. Higher energy costs feed into inflation as stagflation concerns mount in the US. Also, gasoline pump prices in the US are inching closer to the politically sensitive $4 level. 

According to AAA data, the average cost of gas at the pump across the US was $3.66 as of Thursday, up from $3.10 in mid-January. 

"The recent uptick in US consumer price inflation, driven by services, housing and fuel, is already of concern to the Biden administration, which is hoping to secure a second term in the November election," Markus Korhonen, senior associate at geopolitical risk consultancy S-RM, told Newsweek.

In recent weeks, Brent prices jumped to the $90bbl to $92bbl range on a higher war risk premium as Israel and Iran volleyed missiles and drones at each other. Prices sank to as low as the $85bbl handle as the market saw the Middle East conflict was just theatrics. However, prices have increased from $85bbl earlier this week, to $89.50 on Friday morning - perhaps on new fears of tighter Russia supplies. 

The latest Bloomberg data shows Russian seaborne crude exports hit a multi-month high in the four weeks to April 21. Refineries in the country have struggled to be repaired from the series of drone attacks as oil processing sinks to lows last seen in May 2023 when floods forced the Orsk refinery offline. 

So far, Ukraine has only attacked oil-processing facilities deep within Russia, avoiding crude and crude product export ports. 

"Should Ukraine begin also targeting crude oil facilities, this could threaten Russia's overall production and exports and, more meaningfully, global oil prices would tick up, driving up inflation and cost-of-living pressures in the US and elsewhere," said Korhonen, adding, "It would also raise the prospects of Russia retaliating, for example, targeting energy infrastructure that the West relies on."

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The ultimate goal of Ukraine's drone attacks is to reduce Moscow's oil revenues that finance the war. This means that Russia's crude export ports will be targeted at some point. And we're 100% sure the Biden administration is terrified about this ahead of the elections. 

If that happens, "it would not only bring up the price of oil, it would put a lot of pressure on inflation because of the impact on prices," said O'Donnell.

The question becomes when Kyiv begins hitting Russia's crude export terminals.

By Zerohedge.com

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Leave a comment
  • Mamdouh Salameh on April 26 2024 said:
    If the United States is pleading with Ukraine not to strike Russian refineries, it is because this will lead to a rise in Gasoline and Diesel prices in the US market in a presidential elections' year as it may harm the election chances of President Biden for a second term.

    However, I find it very difficult to believe that Ukraine would refuse to heed Washington's pleas. After all, most of the weapons that Ukraine is using against Russia comes from the United States.

    Only Israel can refuse to heed America's wishes because it has more influence in the US Congress than an American president. Ukraine isn't in that league and will never ever be.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert
  • Carlos Everett on April 26 2024 said:
    I applaud Ukraine leadership in targeting both refineries and tanks, but they need to after their docks where they are loading for oil sales.Hit them and then hit them again so they cannot be repaired, keep them guessing as to when they could repair. This will stop the war the fastest. Keep hitting their Dockage at their 5 unloading ports. Hit them and then 2 days hit them again -go after everyone of their exporting ports.
  • fredric longabard on April 28 2024 said:
    Biden is working hard to preserve Russian production while doing everything he can to restrict his own and us taxpayers are paying for it all causing higher inflation and he expects this to help his reelection. WOW!

Leave a comment




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