Russian oil refining expected to fall to multiyear low amid unplanned repairs and shutdowns caused by Ukrainian attacks

Russian oil refining is anticipated to plummet to a multiyear low in August due to unplanned repairs and shutdowns resulting from Ukrainian attacks, according to the Kremlin-affiliated newspaper Kommersant. The forecast, based on analytics firm Kpler, suggests that output will reduce to around 4 million barrels per day, a decline of nearly 5% compared to July and about 2.5% lower than June's record low of 4.1 million barrels per day.

Industry sources suggest processing could range between 3.8 million and 4.1 million barrels per day in August, with a potential increase to 4 million and 4.3 million barrels per day in September. However, the industry will not return to its normal range of 5.3 million to 5.5 million barrels per day in the near future. If production drops below 3.3 million to 3.5 million barrels per day, supplying the domestic fuel market becomes extremely challenging.

The Russian gasoline market is particularly sensitive to production cuts; in early July, refineries were only producing about 70% of the gasoline needed during peak demand, leading authorities to import fuel. Global oil products markets have also been adversely affected by attacks on Russian refineries, with the International Energy Agency lowering its global refining forecast by 370,000 barrels per day due to strikes on Russian plants and disruptions from the Middle East.

Notably, the Orsknefteorgsintez refinery, one of the latest targets, was attacked by Ukrainian drones on August 11, causing a fire and equipment damage. In response to fuel shortages, the Lipetsk Region reintroduced "odd-even" gasoline sales on August 13, while the Orenburg Region started implementing the system for the first time.