Ukrainian Drones Strike Russian Oil Refinery Near the Baltic Sea

What Happened?

Ukrainian attack drones struck an oil refinery near the Baltic Sea, setting multiple structures on fire at Primorsk and Ust-Luga. According to the British Broadcasting Corporation, on Tuesday, Ukraine drone forces commander Robert Brovdi said Russia’s oil infrastructure had been struck again on Monday night ‘to keep the fire going.’ 

Ukrainian President Volodymyr Zelenskyy said on Monday that allies have asked Kyiv to reduce attacks on Russia's energy sector because of the global energy crisis. Mr. Zelenskyy added attacks on Russia’s oil infrastructure would only end if Russia stopped targeting Ukraine's energy system.

Why it Matters

The Ukrainian strikes on key Russian oil facilities are significant for two reasons. First, the attacks demonstrate the growing range and precision of Ukrainian drones because they have hit targets far away from Ukraine and the Russian-Ukrainian border.

Second, the attacks on Russian oil facilities have had a measurable impact on Russia’s ability to refine and export oil. According to analysis by Reuters, at least 40% of Russia's oil export capacity was disrupted in late March following the Ukrainian attacks. 

Oil revenue is a key source of income for Russia’s government. Nearly half of the Russian government’s annual revenue comes from oil exports, and oil income is also used to fund Russia’s military operation against Ukraine.

Yet despite production losses due to Ukrainian attacks, because the overall price of global oil per barrel has increased significantly due to the war with Iran, Russia has been able to make more money per barrel while exporting a smaller amount of oil overall. Russia has benefited from the price increase in global oil caused by the Iran war. 

Ukraine’s strikes on Russian oil refineries are also a source of tension between Ukraine and the United States, because the Trump Administration wants Ukraine to refrain from attacking Russian oil infrastructure to help reduce global oil prices. Since Russia’s oil sales directly fund military operations against Ukraine, they are a legitimate military target under international law, and Ukraine will likely continue to strike Russia’s energy sector. 

With Russia and Ukraine targeting each other’s energy sectors and Iran and OPEC nations facing similar wartime damage to their energy infrastructure, these two wars are likely to have a long-term impact on the global oil market. Depending on how long the conflicts last, it could be several years before all the damage can be fully repaired. Which means oil prices are unlikely to return to pre-war levels anytime soon.

How it Affects You

Despite diplomatic pressure to avoid intentionally targeting energy infrastructure, warring nations like Ukraine and Russia are likely to continue doing so. If the Iran war becomes a drawn-out conflict like Ukraine’s, some analysts predict oil prices could reach as high as two hundred dollars per barrel. That would be unprecedented and would likely have severe economic consequences on a global scale.