Ukrainian Attacks to Weigh on Russian Diesel Exports in April

Russian primary crude processing volumes are expected to decline by 300-400kbpd to an average of 5-5.2mbpd, data from a Bloomberg survey of analysts showed, which is likely to weigh on diesel exports in April, after the latest flurry of Ukrainian drone attacks on Russian oil refineries.

• This would be the lowest level since spring 2022.
• Ukraine’s drone attacks have targeted 13 refineries and two smaller facilities, with around 480-900kbpd of processing capacity currently offline, the survey showed.
• “The impact on the refinery runs may not be as pronounced, thanks to additional utilization of the currently operating primary units,” said Sergey Kondratiev from the Institute for Energy and Finance Foundation.
• Russia was set to process around 275mn tons of crude this year, compared with its total processing capacity of 31mn tons, Sofia Mangileva, an analyst at Yakov & Partners said.
• Prior to the attacks, Russia had planned to export 644kbpd of diesel from the Baltic and Black Sea ports in March, according to industry data seen by Bloomberg.
• Russian diesel exports slipped to just over 600kbpd in the first week of March, compared with 675kbpd in February, industry data showed.
• However, expected shipments are likely to be 20-30% lower in April, an oil analyst told Bloomberg.
• “The reason for it is not just the refinery attacks but also the start of spring maintenance and the willingness of the regulators to saturate the domestic diesel market,” the source added.
• Annual spring maintenance at the Moscow refinery started as planned earlier this week, sources told Bloomberg.
• Sergei Vakulenko, a scholar at the Carnegie Endowment for International Peace, estimated that drone attacks are likely to reduce Russian diesel output by 6-8%.
• Exports of diesel and fuel oil could each fall by 1200-150kbpd, he added. IEF’s Kondratiev sees diesel exports falling by 70-100kbpd.