How do Ukrainian strikes against Russian refineries alter the global balance of supply of refined products, including diesel? Can Ukrainian drone attacks directly influence world crude oil prices?

Russia is part of the main crude oil producers with the United States and Saudi Arabia. It extracts about 10 million barrels per day – mbj – from its basement. The US produces nearly 20 million barrels per day of liquids (including 13 million oil and 7 million lighter products). Saudi Arabia also produces about 10 mbj but has excess capacity.

Russia also has very large refining capacity (more than 6 million barrels per day). Since the consumption of petroleum products in the country does not exceed 3.8 million barrels per day, these capacities are very surplus and allow for the manufacture of large quantities of products for export.

Russia exports about 5 million barrels per day of crude oil and 2 million barrels per day of petroleum products (petrol, diesel, etc.). Ukrainian attacks damaged several Russian refineries. As a result of the damage to refineries and high demand for petrol, for example, at the gas stations in St Petersburg, there has been a marked increase.

The consequences of Russian refinery attacks are still limited. Some excess – and unused – refining capacity in Russia has been restored . Eventually the situation could become more serious if the Ukrainian attacks continue. Remediation of damaged refineries is planned, but international sanctions could complicate the supply of spare parts for this restoration.

The impact on international markets of this decline in Russian refining production linked to US sanctions on Rosneft and Lukoil, the main oil producers, sanctions that effectively limit Russian crude oil exports is not negligible. For oil a country like India significantly reduces its imports of Russian oil, offsetting them with imports from the Middle East. The slight decline in production in the Risse refineries reduces the availability of petroleum products, particularly in North-West Europe, and leads to an increase in product prices and the refining margin (the difference between the value of products obtained from one tonne of crude oil and the cost of this tonne of crude oil).

How can we explain that gasoil refining margins in Europe have reached levels in the historic 89th percentile? Is it a phenomenon mainly related to Ukraine or more global?

The increase in gas oil margins is both a consequence of a certain decrease in Russian exports and a strong demand for this product. Gas oil remains the fuel of trucks, buses, and demand remains high In addition there is a large demand for products similar to diesel (domestic fuel in winter) which leads to high prices

Can the 80% increase in gas oil margins in Europe be sustainable, or is it a temporary reaction to Ukrainian attacks?

The situation of Russian refining is unlikely to improve in the short term and we are entering the winter when demand for diesel fuel, to meet certain heating needs, remains strong. It is likely that in the coming months the prices of diesel oil will remain higher, despite a low crude price, than they were this summer. It should also be borne in mind that the refining capacity in Euripe has decreased sharply. In France there were 23 refineries in 1973 with a capacity of more than 120 million tonnes per year. Currently 6 refineries are in operation for a capacity of approximately 70 million tons. And the situation is the same in other European countries

Does the attack on the port of Novorossiïsk, which accounts for about 2% of the world's oil supply, reveal a new structural vulnerability to oil markets? To what extent does Russian capacity reduction disrupt global energy flows?

Novorossiisk, on the Black Sea is with the Baltic ports the main terminal for the export of Russian crude which, produced mainly in Siberia, reaches it by pipelines of several thousand kilometers. Russian oil exports are therefore disrupted by these attacks, but there has been no significant price movement in international markets. Global economic growth remains weak. The Chinese economy, the traditional engine of oil demand, is slowing down. Moreover, oil production is abundant. Brazil, Guyana and even the United States and Gulf countries can put more oil on the market. Oil prices are expected to remain at a moderate level Oil flows will be slightly modified with a decrease in Chinese and Indian imports of Russian oil and an increase in imports from the Middle East. For petroleum products Indian refineries may supplement a decrease in exports of products from Russia.

In the longer term, could these attacks encourage a sustainable reconfiguration of the world oil market (directing flows, reorienting investment, accelerating refinery closures/modernizations)?

Attacks on Russian refineries will lead to a fairly marginal reorganization of oil product flows, with imports from Russia being replaced by imports from Asia, particularly India, and more marginally from Africa and Europe.

However, there will be no significant impact on refining investments. European capacities are sufficient to meet needs and uncertainties about the future of oil consumption cannot encourage investment .