MOSCOW, July 10 — Ukrainian drone strikes on Russian oil facilities have tightened global markets for refined fuels, with the International Energy Agency recording a 15% rise in global diesel prices during the third quarter of last year. Russia, the world’s third-largest oil producer, averaged 10.5 million barrels per day in 2023. The drone campaign has since reduced Russia’s refining capacity by 600,000 barrels per day.
That shortfall has fallen hardest on diesel and fuel oil, products that move through global trade in large volumes. The International Energy Agency’s October 2024 report placed the price of diesel at $115 per barrel for the third quarter, up from $100.
The agency attributed part of that increase to disruptions in Russian supply. The figures are the most concrete measure yet of how the conflict is reshaping energy markets beyond crude oil alone. Crude oil prices, benchmarked against Brent, fluctuated between $70 and $90 per barrel through 2024.
Each major strike on Russian energy infrastructure produced a measurable spike. After the August 4, 2024, attack on the port of Kavkaz, Brent crude rose by 5% in one week, from $78 to $82 per barrel.
Shipping and inventories under pressure
The attacks have also redrawn shipping routes. Tanker operators are avoiding the Black Sea and the Kerch Strait, adding 10 to 15 days to voyages from Russia to Asian markets. That shift has pushed up freight costs and reduced the effective supply of Russian crude and products reaching buyers.
The U.S. Energy Information Administration reported in September 2024 that global oil inventories fell by 50 million barrels in the third quarter. That marked the largest quarterly decline since 2021.
Falling stockpiles typically put upward pressure on prices, and the combination of lower inventories and longer shipping times has kept the market on edge. For the U.S. economy, the knock-on effects are visible at the pump. Gasoline prices averaged $3.50 per gallon in 2024, up from $3.20 the year before.
The increase reflects the broader tightening of global oil markets, though domestic production in the United States has partly offset the impact.
Washington’s position
The Biden administration has urged Ukraine to avoid targeting civilian infrastructure. However, Washington has not publicly condemned strikes on military-related oil facilities. That distinction matters: Russia’s refining and port infrastructure is dual-use, serving both civilian fuel needs and military logistics.
The administration’s stance reflects a careful balancing act. The United States wants to support Ukraine’s self-defence while avoiding a spike in global energy prices that could hurt American consumers and complicate the domestic political landscape.
The record shows no public statement from Washington specifically criticising the drone campaign against oil facilities.
Strategic context
For Moscow, the loss of refining capacity is a double blow. It reduces domestic fuel supplies, forces Russia to export more crude at lower margins, and increases the country’s dependence on foreign refined products for certain grades. The 600,000 barrels per day of lost capacity is not trivial — it represents roughly 6% of Russia’s total crude output.
The attacks have also raised the cost of insuring and transporting Russian oil. Insurers have increased premiums for vessels transiting the Black Sea, and some shipping companies have simply stopped calling at Russian ports in the region.
That has pushed more Russian crude onto longer, more expensive routes to China and India. Market participants are watching for the next phase. If drone strikes continue at the current pace, Russia’s refining capacity could fall further, tightening diesel markets even more.
If the tempo slows, some of the lost capacity may come back online, though repairs to damaged refineries have been slow. The International Energy Agency’s next monthly report, expected later this month, will provide updated figures on supply and demand.
Traders will be watching the diesel numbers closely. The crude market has shown it can absorb volatility, but the market for refined products is less forgiving. What comes next depends on the trajectory of the conflict.
The drone campaign has become a structural factor in global oil markets, not a temporary disruption. That reality is now priced into shipping contracts, refinery margins, and the outlook for fuel costs from Europe to Asia.
