You are using an outdated browser. For a faster, safer browsing experience, upgrade for free today.

News

Home  → News  → Non-renewable Energy  → Russia's oil refining capacity declines by 14% and fuel prices rise sharply

Russia's oil refining capacity declines by 14% and fuel prices rise sharply

May 19, 2024

Bold Ukrainian drone attacks on Russia's energy infrastructure have disabled 14% of Russia's oil refining capacity; This led to a sharp rise in local fuel prices by between 20% and 30% by mid-March.

Although their impact on electricity production was minimal, these attacks represent a major escalation in the conflict, and demonstrate Ukraine's ability to strike targets deep inside Russian territory.

The disruption of part of Russia's refining capacity forced the country to temporarily halt its exports in order to focus production on meeting growing domestic demand. Therefore, Russia resorted to importing refined products from neighboring countries such as Belarus and Kazakhstan, imposed a ban on gasoline exports for a period of 6 months, and enhanced shipments of petroleum products via rail to mitigate the impact of these attacks.

Ukraine is carrying out these attacks on refineries with the aim of undermining Russia's ability to generate revenues from energy exports. Which puts great financial pressure on Moscow and hinders its ability to finance its war.

This strategy is particularly effective in light of the rise in global energy prices. Which doubles the impact of the loss of export revenues on the Russian economy.

Although the United States provides significant military and economic support to Ukraine, it expresses concern that these attacks may lead to a further rise in global oil and gas prices. Which may negatively affect the global economy and exacerbate the increasing wave of inflation.

The United States is trying to find solutions to alleviate these concerns, including coordination with allied countries to increase the pumping of oil into global markets.