Energy Market Bad News! Russian Oil Export Hub Hit by Successive Attacks; Petroleum Export Capacity Already Paralyzed by 40%?

Cailian Press, March 26 (Editor: Xiao Xiang) According to industry insiders’ calculations based on market data, due to Ukraine drone attacks on Russian oil export hubs, damage to a major oil pipeline, and the detention of some oil tankers, Russia’s at least 40% of its oil export capacity may have stalled. This will undoubtedly bring new bad news to the energy market, which is already troubled by Middle Eastern conflicts.

Two major Russian oil shipping ports in the Baltic Sea—Primorsk and Ust-Luga—were attacked by Ukrainian drones between the night of the 22nd and early morning of the 23rd. The attacks caused fires, with thick smoke visible even from across the Finnish border.

Sources say both ports suspended crude oil and petroleum product loading on Wednesday. This drone attack on Russia’s Baltic ports is one of the largest strikes on Russian oil export facilities in Ukraine’s ongoing four-year conflict with Russia, likely increasing uncertainty in the global oil market amid Middle Eastern tensions.

Both ports are located in Leningrad Oblast in northwest Russia, about 80 kilometers apart. According to Leningrad Governor Alexander Drozdenko’s report on the 23rd, Russian air defense systems intercepted over 70 Ukrainian drones flying into the region between the night of the 22nd and early morning of the 23rd. The attack caused several fuel tanks at Primorsk to catch fire.

Finnish Coast Guard official Jukka-Pekka Lumilahti said Wednesday that the fire at Primorsk has not yet been fully extinguished. “The fire there is almost as intense as when it first started, still burning,” he said. “It’s a major fire, and there’s a lot of smoke on the scene.”

Finnish MP and Defense Committee Chairman Heikki Autto pointed out that when he landed at Helsinki Airport on Tuesday, he saw a huge column of black smoke rising from the direction of Primorsk.

In recent weeks, as Washington-mediated peace talks have stalled, Ukraine has intensified drone attacks on Russian refineries and export routes, aiming to weaken Russia’s economy.

Earlier this week, Ukraine’s Security Service (SBU) announced that its drones successfully hit the Ust-Luga port. “The attack damaged the oil loading racks and the oil and petroleum product storage tanks,” the SBU said, adding that such attacks aim to reduce Russia’s foreign exchange earnings from oil exports.

Has Russia’s oil export capacity already dropped by 40%?

It is reported that Primorsk is Russia’s main export terminal for Ural crude oil and high-quality diesel, handling over 1 million barrels of exports daily. Sources say that last year, Ust-Luga exported a total of 32.9 million tons of oil products, while Primorsk exported 16.8 million tons.

Industry insiders estimate that after this week’s attacks, as of Wednesday, about 40% of Russia’s oil export capacity (roughly 2 million barrels per day) has been halted.

This estimate includes Primorsk, Ust-Luga, and the “Friendship” pipeline running through Ukraine to Hungary and Slovakia.

Ukraine has also previously attacked Russian pipeline pump stations and refineries. Since early this month, the Novozyisk oil terminal (with a processing capacity of up to 700,000 barrels per day) has been damaged by Ukrainian drone strikes, resulting in below-target loading volumes.

Additionally, traders say frequent detention of Russia-related oil tankers in Europe has blocked the flow of Arctic crude oil exports from Murmansk port, which amounts to about 300,000 barrels per day.

Russia’s oil exports are a major source of government revenue and a core pillar of its $2.6 trillion economy. Despite recent Middle Eastern conflicts causing oil and gas prices to surge, potentially benefiting Russia’s energy exports, if the current severe export capacity restrictions are not resolved, high oil prices’ dividends may slip away.

Traders say that as Western export routes are blocked, Moscow will have to rely on exporting oil to Asian markets, but limited transportation capacity means these routes’ volumes remain constrained.