Ukraine has escalated its assaults on Russian oil refineries in recent months, aiming to disrupt Russian export revenues and limit fuel supplies to Russian President Vladimir Putin's forces. According to the RIA state news agency, Ukrainian drones recently targeted an oil refinery in Russia's Kaluga region, causing a fire. Additionally, Ukraine struck Gazprom's Neftekhim Salavat oil refinery, which is one of Russia's largest, as confirmed by Radiy Khabirov, the head of Russia's Republic of Bashkortostan. However, the Biden Administration has criticized these tactics, with Defense Secretary Lloyd Austin expressing concerns about their potential impact on global energy markets. He urged Ukraine to redirect its focus toward military targets that can directly influence the ongoing conflict.
In an article for Foreign Affairs magazine, Michael Liebreich, the founder of Bloomberg New Energy Finance, Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air, and Sam Winter-Levy, a doctoral candidate in political science at Princeton University, have put forth the argument that Ukrainian strikes on Russian refining facilities would not increase global energy prices.
According to these experts, the attacks carried out by Ukraine would only impede Russia's ability to convert its oil into refined products like gasoline, without affecting the overall volume of oil extraction or export.
They further stated that the reduction in domestic refining capacity would compel Russia to export a greater amount of crude oil, thereby causing a decrease in global prices rather than an increase.
Moreover, these strikes are likely to have a continued impact within Russia itself, where prices for refined products such as gas or diesel are already skyrocketing. This implies that Ukraine's attacks are effectively achieving the objectives of unsuccessful Western economic sanctions, as per the experts' analysis.
The Western countries have made efforts to impose various sanctions on Russia to reduce its income from energy sources. This includes the US and the UK banning Russian oil and gas, as well as G7 leaders agreeing to establish a price limit of $60 per barrel for Russian crude oil.
Despite these measures, Russia has largely found ways to circumvent them. Deputy Prime Minister Alexander Novak stated in December of last year that Russia had shifted the majority of its oil exports to China and India.
In April, Russia's oil revenue more than doubled compared to the previous year, as reported by Bloomberg, showcasing its success in redirecting its operations. The total oil and gas revenue for the month reached 1.23 trillion rubles, marking an increase of nearly 90% from April of the previous year.
According to Reuters, Russia was able to swiftly repair some of the key refining facilities that were impacted by Ukrainian strikes, reducing the affected capacity to around 10% from nearly 14% by the end of March, based on the agency's calculations.
However, Ukraine has launched new attacks on refining sites since then, and the impact of these attacks on Russia's repair efforts remains uncertain.
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