Due to Ukrainian military strikes: Russia faces its worst-ever oil export crisis
28 March 09:15
Russian oil companies have informed buyers of a possible declaration of force majeure regarding oil shipments through the Baltic ports of Primorsk and Ust-Luga, Reuters reports, citing three industry sources, according to "Komersant Ukrainian".
The two largest oil-loading ports, from which at least two tankers departed daily in March, have been hit by UAV attacks three times since the start of the week. Primorsk, with a capacity of 1 million barrels per day, suspended oil loading on March 22 after a fire broke out in fuel tanks at the port.
On March 25, Baltic ports were attacked again, but only Ust-Luga, with a capacity of 700,000 barrels per day, was affected. On Friday, Ust-Luga was attacked by UAVs once again, sources told Reuters.
As a result of the shutdown of the two ports, about 40% of Russian oil exports were paralyzed, marking the largest disruption to oil supplies in the country’s modern history, the agency reports.
Primorsk resumed oil transshipment on March 26 but continues to operate at reduced capacity due to damage, Reuters sources said. Ust-Luga, through which coal and fertilizers are also exported, issued an official statement announcing the suspension of oil shipments without specifying when exports would resume. According to one of Reuters’ sources, oil shipments from the port scheduled for mid-April have not yet been approved.
“This is the most serious threat to Russian oil and petroleum product exports since the start of the war,” says oil and gas sector analyst Boris Aronstein. “The sophistication, scale, and targeting of the attacks, as well as the timing of their execution—all of this together has led to an effect that I personally cannot recall in more than four years of war.”
According to Aronshtein’s estimates, up to 50% of maritime oil exports—amounting to 3.5–4 million barrels per day—have been affected.
Due to the UAV attack in Ust-Luga, the Novatek gas complex, which processes gas condensate into oil, kerosene, and fuel oil, has suspended operations. Oil exports from the plant have been halted, sources told Reuters, and the timeline for resuming operations is unknown.
Strikes by Ukrainian drones on ports could impact Russia’s oil export revenues, which are used to finance the war, and partially offset the temporary suspension of U.S. sanctions, according to analysts at the U.S. Institute for the Study of War.
In the week leading up to the strikes, oil exports brought Russia $2.45 billion—a record amount since April 2022—and compared to late February, these revenues jumped by 120% based on prices for Russian Urals crude, which in India first exceeded $120 per barrel.
Judging by all accounts, both in Ust-Luga and in Primorsk, the terminals themselves and, above all, the oil storage facilities were seriously damaged, notes military analyst Yan Matveev: “The main question is how badly the port infrastructure for transshipping oil and petroleum products has been damaged… If the equipment itself is damaged, this could lead to serious delays.”
