Mastodawn

DevCat May 8, 2024

Why Ukraine Should Keep Striking Russian Oil Refineries

Why Ukraine Should Keep Striking Russian Oil Refineries - Lemmy.World

>Washington’s criticism is misplaced: attacks on oil refineries will not have the effect on global energy markets that U.S. officials fear. These s trikes reduce Russia’s ability to turn its oil into usable products; they do not affect the volume of oil it can extract or export. In fact, with less domestic refining capacity, Russia will be forced to export more of its crude oil, not less, pushing global prices down rather than up. Indeed, Russian firms have already started selling more unrefined oil overseas. As long as they remain restricted to Russian refineries, the attacks are unlikely to raise the price of oil for Western consumers.

Show thread

kava May 8, 2024

Even if Russia increases crude oil exports to compensate, virtually all of their gasoline is produced domestically for domestic consumption. That demand isn’t going to just disappear. Every liter that Russia stops producing from these refinery strikes will be imported from other sources.

They will have to Kazakhstan in order to make up the difference (which they have already started, afaik), then prices go up on the global market for gasoline.

For example they’ve been importing from Kazakhstan. Higher demand for gasoline on global market -> higher prices aka inflation.

If gasoline price goes up, there’s economic incentive to buy crude oil to produce gasoline. That raises price of crude oil. You can’t avoid it. It’s all connected. You reduce global production and you raise price.

Show thread

Habahnow

You bring up a good point that isn’t addressed very well. There’s still less refined oil being produced that is demanded. In this case, its for Russia. I suppose this demand is partially reduced as Russia will try to minimize unnecessary refined oil usage (maybe eventually increasing local prices to discourage unnecessary use), but even then I still feel their reduced refining capabilities should have an impact on prices.

I suppose that other refineries could pick up the slack, but I’m uncertain whether that really makes sense for them, and there’s not an easy way to countries against Russia can reduce their own usage of refined oil in the near term.