Russia cuts oil output in April because of Ukrainian drone attacks

Russia cut oil production in April after Ukrainian drone attacks on ports and oil refineries, as well as the suspension of oil supplies through Druzhba.

Source: Reuters

Details: Reuters sources speaking on condition of anonymity said Russia likely cut output by 300,000 to 400,000 barrels per day in April compared to the average level recorded in the first months of the year.

This may mark Russia's sharpest monthly drop in oil production in the past six years, since the start of the COVID-19 pandemic.

Oil produced mainly in the West Siberian basin is vital for Russia's US$3 trillion economy, so lower output rates reduce the revenues of the world's second-largest exporter.

Potential losses, however, may be offset by the war in Iran, which caused a supply and production crisis on the global oil market. On 16 April, Russian Finance Minister Anton Siluanov said that high prices would help reduce the budget deficit.

In recent weeks, Ukraine launched a wave of drone attacks on Russia's biggest western oil ports, causing major fires, and also struck oil refineries.

"Against the backdrop of ongoing attacks on Russia's ports and refineries, it will be difficult to place oil without cutting output, especially with upcoming spring maintenance shutdowns," one source told Reuters.

Russia classified oil production data shortly after the start of the full-scale war in Ukraine in 2022, citing national security. Russia's Energy Ministry declined to comment.

Background:

• Ukrainian President Volodymyr Zelenskyy has said that Ukraine has completed repairs to the Druzhba oil pipeline, which transports Russian oil to European countries, and it can resume operations.
• Windfall oil revenues, which boosted the Kremlin's depleted coffers due to the war in the Middle East, have failed to revive Russia's faltering economy, which remains in a difficult situation.

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