Drone Attacks on Russia’s Refineries Hampers its OPEC Pledge

Damage to Russian refineries from drone attacks could undermine commitments to OPEC+ supply cuts as it forces up exports, according to Reuters.

• Under the OPEC+ deal, Russia is capping crude production at 9.5m b/d.
• It is also further cutting its exports of crude and products by 300k b/d and 200k b/d respectively, compared to the average level in May-June 2023.
• However, as unrefined crude accumulates with a lack of refinery capacity, it will be difficult for Moscow to meet the commitment.
• Ust-Luga and Novorossiysk oil loadings are up by 0.7m mt compared to the preliminary plan of 8.2m mt (2.1m b/d).
• The Tuapse refinery is also out till at least March due to a drone attack, likely freeing up crude to export.
• The falling refining capacity could also hamper product production, with Reuters estimating naphtha exports to fall by 127.5k-136k b/d and jet fuel exports down by 20k b/d.