Ukraine Attack On Russia Could Drive Oil Prices Higher

Mathias Reding Pexels

As part of its plans to cripple Russia financially, Ukraine has sent drones to damage Russia’s oil production infrastructure. The plans appear to have had a significant effect based on early attacks. The US has asked Ukraine to stop the attacks because they may cause crude prices to rise worldwide. 

The Future –$100 Oil

The British Ministry of Defense said, “Depending on the extent of the damage, major repairs could take considerable time and expense.” Because of the success, Ukraine is likely to continue the attacks. 

Some of the refineries attacked in Russia are south of Moscow, near the Ukrainian border. Others of the north of Moscow. Still others are east of Moscow, according to a map by Bloomberg. The news agency reports that the successful attacks are against production facilities representing about 12% of Russia’s crude output. 

In 2023, Russia was the world’s largest crude oil producer, behind the US but ahead of Saudi Arabia. China and India buy over three-quarters of Russia’s output. If Russia’s production capacity is further damaged, these nations must turn to other sources. 

The attacks on Russian production, married with instability in the Middle East and attacks on tankers in the Red Sea, have increased crude prices sharply this year. Prices recently topped $81, up below $71 in early January. 

Higher crude oil prices threaten to damage the global economy, and a sharp drop in supply grows if Ukraine continues its attacks.

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