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Petroleum industry

Russia's Refining Sector in Crisis as Ukrainian Drone Strikes Exacerbate Fuel Shortages

Strategic Insights

— 1 min read

At least 16 of Russia's 38 refineries have been hit by Ukrainian strikes since August, causing widespread fuel shortages and significantly higher wholesale petrol prices. The crisis has led to a perfect storm of declining production and increasing demand, making it difficult for the government to prioritize supplies for the armed forces and agriculture. Ordinary consumers are suffering the most, with long queues at petrol stations and widespread shortages.

Key Takeaways:

  • At least 38% of primary refinery processing capacities are idle due to Ukrainian drone strikes, resulting in a 20% deficit in production.
  • 70% of the idle capacity, or around 236,000 tonnes per day, is attributed to Ukrainian drone strikes.
  • Petty station owners in occupied Crimea are struggling to maintain supply, with at least half of the peninsula's petrol stations running dry despite emergency rationing rules.
  • Russian refineries have even been fitted with nets to shield them from drones, and some have been converted to use alternative fuels due to the unavailability of jet fuel.
  • Lukoil, Russia's second-largest producer, has banned the use of jerry cans at its stations to pre-empt panic buying.
  • The Kremlin has admitted that Ukraine's strategy of targeting refineries during peak demand season has amplified the crisis.

Statistics:

  • Wholesale petrol prices have surged 50% since January to a record high of 64.11 Russian rubles (almost 60p) per litre.
  • The fire in Yaroslavl will only worsen fuel shortages, with some refineries capable of producing 236,000 tonnes per day.
  • 2509 Russian oil refineries have been hit by Ukraine, with 38% of primary processing capacities idle.
  • 70% of idle capacity is attributed to Ukrainian drone strikes, equating to around 236,000 tonnes per day.

Sources:

  • The Independent
  • RBC
  • AFP/Getty In anticipation of panic buying, Lukoil has banned the use of jerry cans at its stations
  • Evgenia Novozhenina/Reuters
  • Russia's deputy PM, Alexander Novak, has said the balance of petrol reserves 'for both September and October is a difficult one'
  • Reuters
  • VEB (state-owned investment bank)
  • Centre for European Policy Analysis

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