Ukraine Attacks Dent Russia's Fuel Exports, Spike Global Prices

Since Ukrainian forces began targeting Russian refineries, Russia's fuel production has dropped by approximately 5.1 million short tons. This has resulted in a 12 percent increase in gas station prices, with expectations of further rises this month. The question arises: what impact will a sustained offensive against Russian refineries have on the battlefield?

The ongoing attacks on Russia's oil infrastructure are gradually transforming Russia from the world's third-largest fuel producer and exporter into an importer. Since late February, attacks have targeted over 15 Russian refineries and several oil depots, leading to a decrease in gasoline production by over 10 percent and a nearly 4 percent reduction in crude oil output.

Gas station prices in Russia have surged by an average of 12 percent in just three weeks. Russian media warn of upcoming price hikes and potential severe shortages in the civilian market if the attacks continue. However, military operations in Ukraine will remain unaffected due to the prioritization of fuel supplies to the front lines.

The implications extend beyond military logistics, affecting Russia's economy, societal morale, and international stance. The mining sector and fossil fuel processing represent the largest income source for the Kremlin, making up 60 percent of Russia's total exports.

To counter domestic shortages and prevent price escalations, the Kremlin enacted a six-month export ban on gasoline starting from March 1, alongside witnessing a domestic price increase.

Globally, there's been an average price increase of around 13 percent since the year's start, causing particular concern in the United States. Rising fuel costs are feared to negatively influence the outcomes of the upcoming fall elections, leading to widespread condemnation of Ukraine's strikes deep inside Russia by American politicians.

U.S. Defense Secretary Lloyd Austin has warned of a potential "domino effect" on the global energy market, as reported by Bloomberg, during a Senate Armed Services Committee hearing.

Austin commented that Ukraine would be better served by focusing on tactical and operational goals directly impacting the current conflict.

Pentagon spokesman Pat Ryder has emphatically stated the US's stance of not assisting Kyiv in targeting Russian soil.

Ryder clarified that their support for Ukraine is designed to bolster its defense and help it reclaim sovereign territory. They do not support actions beyond Ukrainian borders.

American policymakers are keen to dissociate from any involvement in attacks on Russian territory, aiming to prevent fuel market destabilization. Conversely, European allies like France, Germany, and Britain have supported Ukrainian strikes.

This situation underscores a notable policy gap between European countries and Washington, highlighting the latter's misunderstanding of Europe's circumstances. Ukrainian officials have thanked European nations, asserting their right to target Russian strategic assets.

Olha Stefaniszyna, the Ukrainian Deputy Prime Minister for European and Euro-Atlantic Integration, declared that oil refineries represent a legitimate military target for Ukraine. She added that while Ukraine understands its partners' concerns, its armed forces utilize all means at their disposal to counter Russia.

A spate of attacks has exposed the significant weaknesses in Russia's anti-aircraft defense capabilities. Ukrainian drones have successfully targeted Russian infrastructure over 35 times, achieving an 80 percent success rate. One drone, repurposed from an Aeroprakt A-22 ultralight aircraft, traversed 807 miles undetected to strike Tatarstan's third-largest refinery, which lacked protection.

However, Ukrainians are realistic about the strikes' impact, acknowledging their limited long-term effect on military operations.

Ołeksij Hetman, a major in the Ukrainian reserves, explains that the Russians report Ukraine has cut their refined oil production by hundreds of thousands of barrels daily. Although this sounds impressive, there is a caveat: they used to process 5.7 million barrels daily, but now it's down to 5.1 million. He notes that many refineries remain beyond the reach of their weapons.

Indeed, with over 40 percent of Russian refining activity beyond the drones' reach, the Kremlin can still process enough fuel for the military, public transport, and industry, despite the significant strain on the domestic market.