Just When World Needs Oil, Ukraine Fights To Shut Down Russia’s Exports

Just as Russia started to ride the oil price bonanza created by Iran closing the Strait of Hormuz, Ukraine unleashed a series of drone attacks, knocking out about half of Russia’s oil export capacity. Far from a one off, waves of Ukrainian drones attacked Russian oil export terminals near Saint Petersburg last night — the fourth night in a row.Ukraine’s long-range drone campaign started after President Trump softened American sanctions on Russia’s foreign oil sales. Flying hundreds of miles, Ukrainian drones have damaged or shut down the three largest oil-exporting terminals in European Russia. They knocked offline Russia’s second largest oil refinery, near Saint Petersburg.“The pressure on Russia in the world is decreasing,” President Volodymyr Zelensky told Reuters yesterday in an interview at Kyiv. “Ukraine has its own sanctions: its long-range capabilities.” Evaluating the campaign, Reuters said: “The shutdown is the most severe oil supply disruption in the modern history of Russia, the world’s second-largest oil exporter.” While the world fixates on the Strait of Hormuz, oil prices also could be nudged higher by explosions in the Gulf of Finland. Few press outlets have posted the apocalyptic photos of a half-mile long string of fires burning oil tanks, ships and berths at Ust-Luga, Russia’s biggest oil exporting port. Thick columns of black smoke from Ust-Luga and its sister port, Primorsk, have been visible all week from Helsinki, Finland, 50 miles to the west. “This is the most serious threat to exports of Russian oil and oil products since the war began,” an American energy analyst, Boris Aronstein, told Radio Free Europe, referring to Russia’s full-fledged assault on Ukraine four years ago.Just before the attacks, these two ports handled 45 percent of Russia’s oil exports, Bloomberg calculated yesterday. Reflecting the world hunger for oil, at least 50 tankers wait today in the Gulf of Finland to load Russian oil. For Russia, the Iran war was a real bonanza. The price for Russia’s benchmark oil jumped by at least 50 percent, to more than $95 a barrel. As a rule of thumb, each additional dollar in the price per barrel of oil brings $1 billion to Russia, if the price holds up over one year.“Today, when there’s a deficit in the market, our oil and petroleum products are in high demand,” Russia’s deputy prime minister for energy, Alexander Novak, told reporters at Moscow yesterday. “We’ve moved from a discount to either no discount or, in some cases, even a partial premium.”Scrambling to find working ports, Russia’s state-owned oil pipeline company, Transneft, promised yesterday to reroute oil flows to functioning export terminals. However analysts predict that disruptions will move upstream, to force refineries to cut production, and, possibly, to force companies to cap wells. Mr. Novak also said that he will meet today with oil executives to discuss imposing a one-month ban on gasoline exports.As Ukraine’s drone war enters a new level, Ukrainian sea drones traveled yesterday at least 250 miles through the Black Sea to hit a tanker loaded with a million barrels of Russian oil. Previously, Ukrainian drones hit only empty oil tankers, ships sailing east to Russia’s Black Sea port of Novorossiysk. Yesterday, the Communist Chinese-owned Altura was in international waters, but only 18 miles from the eastern entrance to the Bosphorus. This strait passes through Istanbul, a city of 16.5 million people. Drones hit the bridge and engine room disabling the tanker, but not causing a fire. The crew of 37 evacuated safely to Turkey. Ukraine’s world-recognized drone expertise explains why red carpets rolled out yesterday for Mr. Zelensky at Jeddah, Saudi Arabia. This oil giant usually courts the leader of a fellow petro state, Vladimir Putin. In the Mideast’s new alignment, Russia supplies drones and target intelligence to Iran. Ukraine uses its experience with Russian drone technology and strategy to help Saudi Arabia and four other Gulf states protect themselves from Iran. Today, Mr. Zelensky and the Saudi leader, Crown Prince Mohammed bin Salman, are to sign an agreement on “security cooperation — in particular, the protection of the skies,” an official told Agence France Presse. Over the last month, Saudi Arabia intercepted 586 drones and 49 missiles fired by Iran.While Ukraine prefers direct action, Western countries are gradually cracking down on Russia’s shadow fleet — tankers that duck sanctions, often by flying false flags and filing false shipping routes. In recent weeks, Belgium, Estonia, France, Sweden, and the United States have moved to detain sanction-evading ships.Yesterday, Great Britain joined the movement, taking steps that will probably force Russian oil tankers out of the English Channel. Saying that Mr. Putin was probably “rubbing his hands” over the spike in world oil prices, Prime Minister Keir Starmer authorized the Royal Navy to detain suspect Russian ships. “We should go after the shadow fleet even harder,” he told a European leaders’ defense meeting in Helsinki. “Together we must close off critical sea routes to this vital trade to keep up the pressure on Putin.”This move drew a veiled threat from Russia’s embassy at London.“Such actions have consequences. Navigation becomes unsafe in British waters, where any vessel may be subject to piratical seizure,” the embassy said in an official note. “Russia will use all political, legal, and other tools at our disposal, including asymmetric ones, to protect our interests.”As the European leaders fly home today, they only will have to look out their airplane windows to see the harsh reality of Ukraine’s campaign to block Russia’s oil exports. Columns of black smoke rise from Russia’s burning ports in the Baltic.

Just When World Needs Oil, Ukraine Fights To Shut Down Russia’s Exports

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