Russia faces crude crunch after Ukrainian drone strikes hit refineries

Russia's state-owned oil pipeline monopoly Transneft has reportedly warned domestic producers that they may need to reduce output due to mounting damage caused by Ukrainian drone attacks on key export terminals and refineries.

The warning comes amid heightened Ukrainian strikes targeting Russia’s energy infrastructure, part of Kyiv’s broader strategy to undermine Moscow’s war effort and curtail the Kremlin’s primary revenue stream—hydrocarbon exports, Reuters reports.

Transneft, which transports over 80% of the oil extracted in Russia, has already restricted producers' access to its pipeline storage system and signalled the possibility of accepting less oil if infrastructure suffers further damage, two sources close to Russian oil firms confirmed.

According to the sources, the damage may force Russia—responsible for approximately 9% of global oil output—to scale back production. A third source familiar with pumping operations corroborated the concern, though all three requested anonymity due to the sensitivity of the issue.

Despite these developments, Transneft dismissed the reports, calling them part of a broader Western disinformation campaign.

"The appearance of such fake news with reference to some unnamed sources in the Russian fuel and energy complex causes damage to the image of PAO Transneft," the company stated.

"It can only be caused by the attempts to destabilize the situation within the framework of the information war unleashed by the West against the Russian Federation."

The attacks have reportedly struck at least 10 Russian refineries, cutting refining capacity by nearly 20% at one stage, and inflicted damage on major Baltic Sea ports, including Ust-Luga and Primorsk, according to Ukrainian military sources and Russian industry insiders.

Though the Russian government has not publicly acknowledged the full extent of the damage or its impact on exports, the recent disruption is seen as significant.

Notably, last week, Ukrainian drones hit Russia's largest oil port at Primorsk for the first time since the full-scale war began in 2022. With a daily export capacity exceeding 1 million barrels—or roughly 10% of Russia’s total production—Primorsk was temporarily shut down, only partially resuming operations on September 13. The timeline for full restoration remains uncertain.

Ukrainian President Volodymyr Zelenskyy hailed the drone campaign, saying the attacks had caused “significant damage” and calling them "the sanctions that work the fastest."

Russia lacks the extensive oil storage capacity enjoyed by some of its OPEC+ partners, like Saudi Arabia, making it more vulnerable to disruptions in refining and export logistics.

By Vafa Guliyeva