Transneft Warns of Potential Oil Output Reductions Amid Escalating Ukrainian Drone Strikes

Transneft, Russia’s state-controlled oil pipeline operator, has issued a warning to oil producers about the possibility of needing to scale back production due to ongoing Ukrainian drone assaults on port and refinery facilities, as reported by Reuters on Tuesday, referencing industry insiders.

In recent months, Ukraine has intensified its attacks on Russia’s oil infrastructure, which is a crucial revenue stream for the Kremlin’s military operations.

As per the sources mentioned by Reuters, Ukrainian drones have targeted at least ten refineries since early August, resulting in a nearly 20% reduction in refining capacity at one point.

Most recently, drones struck Primorsk, Russia’s largest oil terminal located northwest of St. Petersburg, temporarily halting its operations.

In light of the persistent drone strikes, Transneft has restricted the ability of producers to store oil within its pipeline network and has warned that continued damage may force the company to accept a reduced volume of oil from producers, according to two sources familiar with the situation.

Transneft has dismissed these reports as «fake» and part of the West’s «information warfare» against Russia, which contributes to 9% of the global oil supply. Russian officials have yet to publicly address the actual extent of the damage to oil facilities.

Ukrainian President Volodymyr Zelensky has characterized these strikes as «the quickest sanctions,» emphasizing the extensive damage they have caused.

These attacks have led to a sharp rise in domestic fuel prices, with wholesale gasoline costs increasing by over 50% since January.

In response to the escalating situation, the Russian government has implemented a temporary ban on gasoline exports for August and September and is reportedly contemplating extending this ban into October.