Ukraine Steps Up Its War on Russia’s Oil Industry

li[algqarem(4z[si{5pv752_media_dl_1.png Bloomberg News

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(Bloomberg) — Ukraine is increasingly targeting Russia’s oil refineries and export facilities with drones, taking the fight beyond the battlefield to strike at Moscow’s economy.

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On Friday, Ukraine claimed to have struck facilities handling almost half of Russia’s seaborne crude exports. The attacks — part of a 200-plus drone raid centered on the Leningrad region bordering Finland and Estonia — came soon after strikes on several refineries crucial to domestic fuel supply.

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Kyiv argues it’s trying to deprive Russia’s military of fuel, and the Kremlin of petroleum revenues. But Western allies have long expressed caution about any steps that could disrupt global oil and fuel supply.

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Since the war began, the two Baltic Sea ports have sent the vast majority of their exports to China and India. Before the conflict, most flows went to Europe.

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But even before Friday’s barrage, Ukraine had been pounding key plants that supply Russians with gasoline, diesel and other fuels — limiting how much Russia can make and highlighting Kyiv’s ability to affect the lives of ordinary citizens.

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In August, the height of the summer driving season, Ukrainian drones carried out at least 13 attacks on major refineries, more than half the total for the previous seven months, data compiled by Bloomberg show. Within that, refineries in Russia’s most populous regions have been targeted more intensely than ever.

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Gasoline shortages that first appeared in remote areas are now creeping closer to Moscow, with wholesale prices on the SPIMEX commodity exchange hitting successive records. Independent distributors that don’t produce their own fuel have been hardest hit, but major companies may also face supply strains if Kyiv continues its campaign.

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“So far, shortages have been limited — it’s more of a matter of price and queues,” said Sergey Vakulenko, a former Russian oil executive and current senior fellow at the Carnegie Endowment for International Peace. “They do not hinder the economy yet, but rather create nuisances for the public.”

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It’s nevertheless a concern for Russian authorities, and on the agenda of Deputy Prime Minister Alexander Novak and the Energy Ministry.

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In response, Russia has banned gasoline exports and instructed refineries to ensure the domestic diesel supply, limiting outbound shipments. The targeted facilities are crucial for fuel supplies in the European part of the country, where over two-thirds of the population lives.

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The frequency of strikes has forced some top refineries to halt operations for days to make emergency repairs, reducing Russia’s crude-processing rates in August to the weakest levels since May 2022.

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Lukoil PJSC’s Volgograd plant, with a capacity of 300,000 barrels a day, was attacked at least five times between January and August. Rosneft PJSC’s Ryazan refinery, designed to process as much as 340,000 barrels a day, was targeted at least four times. A group of plants known as the Samara refineries, with a combined capacity of 485,000 barrels a day, was hit at least seven times.