① Ukraine launched its fifth attack on the Russian Baltic Sea port of Ust-Luga in the past ten days, halting at least 40% of Russia's oil export capacity; ② Ukrainian President Volodymyr Zelenskyy stated that although some allies wish for reduced attacks on Russian energy facilities, he will not make concessions first; ③ Analysts noted that the scale and frequency of Ukraine's attacks on oil and gas infrastructure might increase to cut off revenue for the Russian government.
On Tuesday, Ukrainian drones once again attacked the Russian Baltic Sea port of Ust-Luga, marking the fifth such attack by Ukraine on the port in the past ten days. Industry insiders warned that this could exacerbate difficulties in Russia's energy exports.
The attack on the Baltic Sea port is one of the fiercest strikes in the four-year conflict between Russia and Ukraine. Due to an attack on a major Russian oil pipeline and disruptions to tanker departures, at least 40% of Russia's oil export capacity has been halted.
This is a negative signal for global markets. Currently, due to the US-Iran conflict causing disruptions in the Strait of Hormuz, international energy supplies are already strained. This is also a key factor behind the US temporarily lifting sanctions on Russian energy. However, Ukraine’s precision strikes against Russian energy infrastructure will further strain international energy markets.
Ukrainian President Volodymyr Zelenskyy revealed on Monday that some allied nations had urged Ukraine to reduce its attacks on Russia’s oil industry, but he insisted that he would only cease his strikes on Russia’s energy exports if Russia first stopped attacking Ukraine’s civilian energy facilities.
Hit the seven-inch mark?
Russian Kremlin spokesperson Dmitry Peskov pointed out that Russia is striving to protect its critical infrastructure but emphasized that it does not mean these facilities can be fully safeguarded against such terrorist attacks.
Three industry insiders told the media that during the most recent attack, Ukrainian drones struck crude oil loading facilities operated by Transneft, Russia’s oil pipeline company. The pipeline is crucial for exports from Ust-Luga, which handled 32.9 million tons of petroleum products last year and processes about 700,000 barrels of crude oil daily.
Reports indicate that Russian oil producers have reportedly warned buyers in India and China that they may declare force majeure on oil supplies.
Independent oil and gas industry analyst Boris Aronshtein noted that Ukraine’s recent series of attacks represents the gravest threat to Russia’s oil exports since the start of the Russia-Ukraine conflict. The meticulous planning, scale, direction, and timing of these attacks together have produced effects unseen in over four years of the ongoing conflict.
In the coming months, Ukraine's attacks on oil and gas infrastructure are likely to increase in both scale and frequency, aiming to cut off Russia's significantly increased fiscal revenue sources during a period of surging oil prices.
Analysts point out that at least one-third of Russia's national budget revenue relies on oil income, which may have doubled over the past month.
Editor/Doris