The drone attacks from Ukraine on Russian refineries could disrupt fuel markets globally, the International Energy Agency (IEA) said on Friday, estimating that up to 600,000 barrels per day (bpd) of Russia's refinery capacity could be offline in the second quarter.
Global markets "rely on Russian exports of diesel, naphtha and jet fuel, while refining systems in Asia absorb substantial quantities of the country's straight-run and cracked residue to boost upgrading unit feedstocks," the IEA said in its monthly Oil Market Report today, as carried by Bloomberg.
The agency lowered by 160,000 bpd its forecast of global refinery throughputs this year and now sees these rising by 1 million bpd to 83.3 million bpd, due to lower Russian refinery runs, unplanned outages in Europe, and still-tepid Chinese activity.
Russian refinery outages have added to the unease in the global product market, the IEA said in the report.
In recent months, Ukraine has stepped up attacks on oil refineries in Russia, which have reduced Russian refining capacity, and which, reportedly, have the White House concerned about rising international prices.
The United States has repeatedly urged Ukraine to halt its drone attacks on Russian oil refineries due to Washington's assessment that the strikes could lead to Russian retaliation and push up global oil prices, the Financial Times reported last month, citing sources familiar with the exchange.
According to Reuters estimates, 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.
Due to refinery damage as a result of the drone attacks, Russia's gasoline production fell by 12% in the last week of March compared to the February average, Russian daily Kommersant reported last week, quoting the Federal State Statistics Service, Rosstat. The domestic market hasn't felt the impact, yet, also thanks to higher fuel imports from Belarus, Kommersant notes.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
Comments
Russia was set to process 275 million tons (mt) this year or 13% below the total annual processing capacity of 312 mt in 2023. However, Russia's spare refining capacity can mitigate the impact of the Ukraine Drone attacks.
This will only reduce global refining capacity by 300,000-400,000 b/d or 03%-0.4% and not by 1.0 mbd or 1.0% as the IEA claimed.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert