Key Highlights

  • Ukraine has conducted roughly 50 attacks on Russian refineries over the past 100 days, targeting at least 24 of the country’s 34 large plants.
  • Russian crude processing averaged 3.91 million barrels per day in early July, more than 1.4 million barrels below last year’s level.
  • Moscow has banned exports of gasoline, diesel, and jet fuel, tightening global supply and pushing diesel prices higher.

Ukraine’s sustained campaign against Russian refineries has slashed the country’s crude processing capacity, tightening global diesel markets and sending prices higher. Over the past 100 days, Ukraine has launched roughly 50 attacks on at least 24 of Russia’s 34 major refineries, disrupting operations at plants from the Black Sea to Siberia. The strikes have pushed Russian crude processing to its lowest level since 2005, with early July averages at 3.91 million barrels per day, more than 1.4 million barrels below last year’s pace.

The outages have forced Moscow to ban exports of gasoline, diesel, and jet fuel, removing critical supply from a market already strained by OPEC+ production cuts and rising summer demand. The same attack also hit the AVT-10 unit, further crippling the facility’s output. Other refineries struck include Saratov, Kirishi, Norsi, Moscow, and Syzran, with the Moscow plant expected to remain offline through the end of 2024.

Repeated strikes have delayed repairs, extending outages that typically last weeks or months during planned overhauls. The cumulative effect has been a sharp reduction in Russia’s ability to convert crude into refined products, particularly diesel, which is critical for global shipping and agriculture.

Diesel Markets Feel the Squeeze

The drop in Russian refining output has tightened global diesel supplies, lifting prices and widening refining margins. Russia’s ban on fuel exports has removed a key source of supply for Europe and Asia, where diesel inventories were already below seasonal averages. The attacks have also disrupted flows to domestic markets, forcing Moscow to prioritize military and industrial needs over civilian demand.

Refiners in the U.S.

Repair Delays Extend Outages

Russia’s refining sector faces prolonged disruptions as repeated drone strikes prevent repairs from being completed. The July 14 attacks on the Afipsky refinery in Krasnodar and Gazprom Neftekhim Salavat in Bashkortostan demonstrate Ukraine’s ability to strike deep behind front lines, targeting facilities up to 2,000 kilometers from the conflict zone. The Omsk refinery, Russia’s largest, may take months to restore full capacity, with some units potentially offline until 2026.

Moscow’s export ban, initially intended as a temporary measure, is likely to remain in place as long as refining capacity remains constrained. The delays have also raised concerns about Russia’s ability to meet winter heating demand, particularly in regions reliant on diesel-powered generators.

Next Catalyst: OPEC+ Meeting on July 31

Traders are closely watching the upcoming OPEC+ meeting on July 31 for signs of further production cuts, which could exacerbate the supply tightness caused by Russia’s refining outages. If the group extends or deepens its current cuts, diesel prices could climb further, particularly if Ukraine continues to target Russian refineries. Meanwhile, European refiners are expected to release inventory data in early August, which will provide a clearer picture of how well the market is absorbing the loss of Russian supply.

The combination of geopolitical risk and seasonal demand could keep diesel prices elevated through the third quarter, with potential spillover effects on inflation and economic growth.

This article is for informational purposes only and does not constitute financial advice. Please consult a licensed financial adviser before making investment decisions.