40% of Russia’s oil export capacity is halted (2M bpd) due to attacks on infrastructure

Recent Ukrainian drone strikes, a disputed pipeline attack, and the seizure of tankers have caused at least a 40% reduction in Russia’s oil export capacity, according to Reuters calculations. This disruption is the most significant in modern Russian history, impacting the world’s second-largest oil exporter, and it coincides with oil prices exceeding $100 per barrel due to the Iran conflict. Oil revenue is a critical component of Russia’s national budget and its $2.6 trillion economy.

Ukraine has escalated its attacks this month, targeting Russia’s oil and fuel export infrastructure, including the key western ports of Novorossiysk, Primorsk, and Ust-Luga. These attacks have shut down approximately 2 million barrels per day of crude oil export capacity as of Wednesday.

The damage extends to the Druzhba pipeline, which traverses Ukraine to Hungary and Slovakia. Kyiv has also targeted pumping stations and refineries, aiming to reduce Moscow’s oil and gas revenue, which constitutes about a quarter of the state budget, and to weaken its military. Russia has condemned the Ukrainian strikes as terrorist acts and increased security across the country.

Following damage from Russian strikes, Ukraine reported parts of the Druzhba pipeline were damaged in late January, leading Slovakia and Hungary to demand an immediate resumption of supplies. Additionally, the Novorossiysk oil terminal is operating below capacity, handling up to 700,000 barrels per day. The seizure of Russia-linked tankers in Europe has further disrupted 300,000 barrels per day of Arctic oil exports from Murmansk.

With its westward export routes affected, Russia is now focusing on Asian markets. However, these routes are limited. Russia continues to supply China via the Skovorodino-Mohe and Atasu-Alashankou pipelines, and ESPO Blend exports by sea from Kozmino, totaling roughly 1.9 million barrels per day. Furthermore, Russia is shipping around 250,000 barrels per day from its Sakhalin projects in the Far East and supplying approximately 300,000 barrels per day to refineries in Belarus.