Russia’s daily crude oil processing has dropped by 4% so far in February compared to the first half of January, and by 8.6% versus the first half of February 2023, according to Reuters’ sources and calculations.

The drop comes as Russian refineries and other energy infrastructure have been targeted and hit by Ukrainian drone attacks in recent weeks.

Refineries in Russia processed 711,000 tons of crude oil per day in the first half of February 2024, down from 752,000 tons for the first two weeks of January and 778,000 tons in February last year, per Reuters calculations based on information from sources.

The Ukrainian attacks and the damages they caused to Russian refineries have reduced Russia’s capability to process crude, which has increased crude volumes shipped out of Russia but has decreased diesel and other product exports.

The lower supply of middle distillates, which include diesel, from Russia has been tightening the global product market in recent weeks, on top of trade flow shifts as tankers avoid the Red Sea/Suez Canal route due to the Houthi attacks on commercial vessels.

Distillate supplies have been disrupted by lower supply from Russia amid Ukrainian attacks on Russian refinery infrastructure and Houthi attacks on vessels in the Red Sea and the Gulf of Aden, Saxo Bank’s Head of Commodity Strategy, Ole Hansen, said at the end of last week.

This week, industry sources told Reuters that Russia’s Novatek had restarted fuel processing at its complex on the Baltic Sea damaged last month in a suspected Ukrainian drone attack.

Novatek’s export terminal and processing site at Russia’s Ust-Luga port on the Baltic Sea was damaged in January by what Ukraine said was a drone attack on Russian energy infrastructure. Novatek has now resumed processing at the complex which turns gas condensate into light and heavy naphtha, jet fuel, fuel oil, and gasoil.

By Charles Kennedy