Drone attacks cut output at half of Russia's 6 largest diesel refineries
Key Facts
Half of Russia's 6 largest diesel-producing refineries were forced to sharply cut or halt output in September because of damage from drone attacks, according to Reuters calculations. The disruptions hit facilities in a country that was the world's second-largest diesel exporter after the United States before restricting overseas sales during the summer. The International Energy Agency sees a shortage of operable Russian refining capacity as the binding constraint on supplies. In its assessment, easing restrictions on Russian diesel exports will not materially change the global market balance. The refinery outages come as the diesel market faces declines in both Russian exports and Middle Eastern supplies.
Traders had estimated Russian diesel exports in June, before the restrictions were imposed, at less than a million metric tons. That compares with about 2.5 million tons a month a year earlier, when refineries were operating normally, according to Reuters. Alongside the damage from attacks, Moscow restricted overseas sales during the summer to meet domestic fuel demand. It then partially eased the diesel export ban effective October 10, following the agreement with Trump, allowing shipments to return to overseas markets. London Stock Exchange Group data showed that diesel export loadings had resumed at Russia's Baltic Sea port of Primorsk.
Globally, the International Energy Agency estimated that diesel exports fell by 700 thousand barrels per day in September compared with the same month a year earlier. The combined loss from Russia and the Middle East reached 1.3 million barrels per day over the same period. Supplies from other sources offset part of that decline, according to the agency's October Oil Market Report. Even so, total global exports remained below their level a year earlier, despite the replacement supplies. The market thus combined falling supplies from Russian and Middle Eastern export regions with increased supplies from other sources that were insufficient to fully offset the loss.
In the Russian market, Deputy Prime Minister Alexander Novak said, when discussing easing export restrictions, that "the diesel market today is balanced and supplies are sufficient." Seaborne crude oil exports, meanwhile, rose in September, according to S&P Global vessel-tracking data. Those exports reached 4.088 million barrels per day during the month. That represented a monthly increase of 8%, coinciding with output cuts or shutdowns at major diesel-producing refineries. The rise in crude shipments thus came in the same month that Russia's refining industry faced damage from drone attacks.
In response to the supply crisis, the International Energy Agency's governing board said in a statement dated October 15 that member countries had already released about 330 million barrels from stocks. Those volumes formed part of the collective response to the supply crisis being implemented by member countries. The agency's executive director, Fatih Birol, urged countries that had not fulfilled their earlier commitments to accelerate the release of the remaining volumes. He called for diesel to be prioritised when implementing those commitments. Announced plans to accelerate releases include more than 20 million barrels of diesel, to be made available as soon as possible.
Looking ahead, Novak forecast that Russian diesel exports would recover by the end of 2026 to between 3 million and 3.5 million tons a month. The deputy prime minister described that range as the usual level for Russian exports. The International Energy Agency, meanwhile, expects the gasoil and diesel market to remain tight for an extended part of 2027. In its assessment, the market balance depends on a recovery in petroleum product supplies from the Middle East. That assessment places the return of those supplies alongside the restoration of Russian refinery operating capacity among the factors determining the diesel balance in the period ahead.