Drone Attacks Prove Larger Threat Than Red Sea for Oil Supply

The recent drone attacks on Russia’s energy infrastructure could be a larger disruption to global fuel supplies than attacks on shipping in the Red Sea, according to Bloomberg.

• While the Houthis are forcing ships to go the long way round the Cape of Good Hope, adding shipping delays and additional costs, it is not changing the total supply of oil available, Bloomberg noted.
• In contrast, done strikes risk destroying supply and tightening global balances.
• Russia remains a massive exporter of crude and products. Any material disruption would have wide effects on oil markets, even impacting markets that no longer trade in Russian products, such as the EU.
• The recent attack on the Volgograd refinery by a Ukrainian drone has had little effect on market today, but should strikes continue and increase, it could add support to prices.