Drone Could Cause Jump In Oil Price

Ukrainian military forces have attacked one of the Lukoil refineries in Russia. According to Bloomberg, it processes 300,000 barrels a day. A significant interruption in Russian production could drive global crude prices up. 

Russian Refineries

In March of last year, attacks on Russian refiners moved oil prices up almost 3% in a single day. CNBC said at the time, “The campaign of Ukrainian attacks this year has hit refineries representing 25% of Russia’s total refining capacity of 6.8 million barrels per day. About 50% of Russia’s refining capacity is within range of a Ukrainian drone attack.”

Crude oil prices have settled at about $71 recently, down from $80 in early January. The new Ukraine attack moved the price up about 1%.

In the early stage of the invasion, fears of low Russian production briefly drove oil prices to $133. The journal Nature pointed out that. “As the second-largest oil producer and natural gas exporter, Russia’s war with Ukraine has severely impacted the energy market.”

Worldwide Supply Problems

The danger of the attacks is that worldwide crude prices could rise quickly again. This would affect gas, diesel, jet fuel, and petrochemical prices, which means a chance it could begin to cripple businesses that rely on crude oil supply.

There is no perfect model for how much capacity severe attacks on Russian refineries would take offline. However, just a credible threat of a large interruption would push crude prices up;

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