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2025-09-16 20:14:49
[Russian Oil Pipeline Giant Limits Oil Storage; Production May Be Affected by "Quickest-Effective Sanctions"] ⑴ Russian oil pipeline monopoly Transneft is limiting oil storage within its system and has warned oil producers that it may have to cut production due to a series of drone attacks launched by Ukraine on key export ports and refineries. ⑵ Ukraine's escalating attacks on Russian energy facilities since August, aimed at hindering Russia's war effort and cutting its revenue stream, could ultimately force Russia, which accounts for 9% of global oil production, to cut production. ⑶ Ukrainian drones attacked at least 10 refineries, temporarily curtailing nearly one-fifth of Russia's refining capacity and damaging key Baltic ports such as Ust-Luga and Primorye. ⑷ Although Russian authorities have not publicly commented on the extent of the damage, Transneft, which handles over 80% of Russia's oil production, has restricted the ability of oil companies to store oil within its pipeline system and has stated that further damage to infrastructure could force it to accept less oil. (5) The attack poses a significant challenge to Russian oil production and exports, particularly given that Russia lacks the extensive oil storage capacity of major OPEC producers, potentially leading to a decline in production. (6) Institutional analysis indicates that Russia's ability to increase production is threatened by limited storage capacity, while refinery outages will also hinder production due to crude oil storage congestion. However, Asian buyers continue to demand Russian crude oil, and production is expected to decline only modestly.
