Shelling of Russian refineries pushes oil prices up
The price of oil is quite sensitive to geopolitical factors; oil begins to rise even with the slightest threat of production cuts.
Recently, Ukraine has increased the number of attacks on the oil refining complex of the Russian Federation.
According to the Economic Truth , in 2024 alone, 13 oil refining complexes in Russia were damaged. Which is about 14% of the country's total capacity.
The role of oil refineries (ORPs) in oil pricing also cannot be underestimated. Refineries perform a critical function by converting crude oil into end-use products such as gasoline, diesel fuel and jet fuel.
The implications for global oil and derivatives supply could be significant, given Russia's role as one of the world's largest exporters of oil and petroleum products. Reduced production capacity at Russian refineries could lead to a reduction in export supplies, increasing pressure on global supply.
Given existing shortages or limited supply, any shocks, such as shelling, could trigger a rise in oil and petroleum product prices. This, in turn, could lead to higher energy costs for end consumers and increased inflation in the global economy.
How did the attacks on oil refineries affect oil prices?
As expected, the market did not take long to respond; over the past few months, the price of Brent crude oil has risen from $75 to $85 per barrel:
It's worth noting that this isn't just a reduction in commodity supply on the commodity market, but also a purely psychological factor. Traders, upon receiving news of new attacks on refineries, begin to speculate on the rise.
The US's requests to the Ukrainian government to reduce the number of strikes on Russian oil refineries, as this increases the cost of oil and petroleum products, also confirm this influence.
But for now, the Ukrainian government is unwilling to stop the attacks, as they are in line with Ukraine's strategic interests.
Therefore, we should expect a further rise in oil prices after the latest strikes on Russian refineries. Especially since the oil price peaked at $120 per barrel a couple of years ago.
Looking at current trends, the oil market continues to be extremely sensitive to any geopolitical events, especially those affecting leading oil producing countries.
Shelling of Russian refineries is driving up oil prices, forcing market participants to react aggressively to every piece of news, making oil trading particularly volatile .
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