Ukraine's drone attacks highlight threat to Russian oil exports

Recent drone attacks by Ukraine on refineries in Russia demonstrate Ukraine's ability to threaten Russian oil exports through the ports of Primorsk and Novorossiysk, according to Thomas O'Donnell, an energy expert at the American think tank Wilson Center.

O'Donnell referred to reports from the British newspaper "Financial Times" mentioning that the United States has urged Ukraine to halt drone attacks on Russian refineries.

The US's concerns stem from fears that Russia might retaliate against Western energy infrastructure and the potential for higher gasoline prices – a scenario every president seeks to avoid during an election year, the analyst clarified.

In O'Donnell's view, these official concerns are unwarranted.

He highlighted that the US has consistently supported Ukraine's right to target sites in Russia, as long as Kyiv refrains from using American weapons. This criteria has been met since the drones are not of US origin. O'Donnell argued that although Putin could target NATO's energy facilities in response, it would pose significant risks for Moscow.

The impact on oil and derivative fuel prices is also minimal. Ukraine's attacks target refineries, not the export infrastructure, meaning the strikes reduce Russia's production of diesel, gasoline, and aviation fuel. This hampers the Russian war effort and its military operations in Ukraine without necessarily reducing exports or influencing global prices. If Russia opts to export unrefined oil, the global market could see an increase in supply, potentially lowering prices. O'Donnell pointed out that for the US, the world's leading oil producer, these dynamics are clear.

"So, what truly concerns Washington?" O'Donnell pondered. The recent attacks indicate Ukraine's capability to target the ports crucial for Russian oil exports, potentially jeopardizing a significant portion of Russia's commodity export. "This would indeed represent a significant shift, raising considerable concern in Washington," he noted.

Specifically, two key oil export ports, Primorsk, north of St. Petersburg at the Baltic pipeline's terminus, and Novorossiysk, on the Black Sea coast, are within Ukrainian drone range. Ukrainian sea drones have also demonstrated their capability by sinking a Russian landing ship near Crimea, suggesting potential threats to Novorossiysk from the sea. A concerted attack on these oil ports by Kyiv could cut Russian oil revenue while possibly driving global prices up, similar to trends observed between 2003 and 2008, with substantial implications, O'Donnell explained.

However, he mentioned the possibility of mitigating or avoiding the crisis if Ukraine coordinates its actions with the USA, Great Britain, and the EU, allowing these actors to adjust and compensate for the lost Russian market share. The real issue for the US is the potential premature start of Ukrainian operations against Russian oil facilities before the international community can bolster production to offset the market gap left by Russia. Such an initiative from Kyiv could strengthen existing strategies aimed at limiting oil prices and reducing Russian revenue, without compromising exports. Unexploited oil reserves outside Russia could adequately replace its exports, necessitating swift action from Washington, London, Warsaw, and other EU capitals, O'Donnell concluded.

"Give us weapons to counter Russian assaults, or Ukraine will step up strikes on Russian energy facilities and other strategic targets," warned Ukrainian President Volodymyr Zelensky in an interview with "The Washington Post," confirming US dissatisfaction with attacks on Russian refineries.

"If we lack air defense to shield our energy system from Russian attacks, why shouldn't we retaliate? Their population must adapt to living without gasoline, diesel, and electricity... it's only fair," declared the Ukrainian President.

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