A refinery in southwestern Russia owned and operated by state oil giant Rosneft has halted roughly half of its crude processing capacity following a drone attack from Ukraine over the weekend, industry sources told Reuters on Monday.
On Saturday, Dmitry Azarov, governor of the Samara region where Rosneft's Kuibyshev oil refinery is located, said that the facility was attacked by drones. One of the two primary crude refining units at the refinery caught fire, the governor said, as quoted by Russian news agency Interfax. There were no casualties, Azarov added.
Ukraine has stepped up attacks on oil refineries in Russia in recent weeks, 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 on Friday, citing sources familiar with the exchange.
Ukrainian drone attacks on Russian refineries in recent weeks have taken out as much as 600,000 barrels in daily processing capacity in Russia, according to commodity trading major Gunvor.
"It is significant because obviously this is gonna hit the distillate exports straight away," Gunvor chief executive Torbjörn Törnqvist told Bloomberg on the sidelines of the CERAWeek conference in Houston last week.
"So that will probably take down exports by a couple of hundred thousand barrels, so to me, it's a distillate problem," the executive added.
Lower refining capacity in the second quarter, due to refinery maintenance and emergency repairs following the attacks, could be one of the reasons why Russia said it would focus on cuts to oil production instead of exports in its voluntary supply reduction as part of OPEC+ in the second quarter, analysts say.
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