Washington’s criticism is misplaced: attacks on oil refineries will not have the effect on global energy markets that U.S. officials fear. These s​trikes reduce Russia’s ability to turn its oil into usable products; they do not affect the volume of oil it can extract or export. In fact, with less domestic refining capacity, Russia will be forced to export more of its crude oil, not less, pushing global prices down rather than up. Indeed, Russian firms have already started selling more unrefined oil overseas. As long as they remain restricted to Russian refineries, the attacks are unlikely to raise the price of oil for Western consumers.

  • Habahnow
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    7 months ago

    You bring up a good point that isn’t addressed very well. There’s still less refined oil being produced that is demanded. In this case, its for Russia. I suppose this demand is partially reduced as Russia will try to minimize unnecessary refined oil usage (maybe eventually increasing local prices to discourage unnecessary use), but even then I still feel their reduced refining capabilities should have an impact on prices.

    I suppose that other refineries could pick up the slack, but I’m uncertain whether that really makes sense for them, and there’s not an easy way to countries against Russia can reduce their own usage of refined oil in the near term.

    Ultimately, time well tell whether these attacks are having a strong impact on global refined oil.

    EDIT: one thing that they do mention, that counteracts my point above is the fact that Russia exporting additional unrefined oil, that would mean unrefined oil pricing would decrease, which could counteract the reduction in production of refined oil.