The US has urged Ukraine to halt attacks on Russia’s energy infrastructure, warning that the drone strikes risk driving up global oil prices and provoking retaliation, according to three people familiar with the discussions. […]
One person said that the White House had grown increasingly frustrated by brazen Ukrainian drone attacks that have struck oil refineries, terminals, depots and storage facilities across western Russia, hurting its oil production capacity.
Russia remains one of the world’s most important energy exporters despite western sanctions on its oil and gas sector. Oil prices have risen about 15 per cent this year, to $85 a barrel, pushing up fuel costs just as US President Joe Biden begins his campaign for re-election.
Un-paywalled link: https://archive.ph/wv1Y3
I’m curious how an oil refinery in Russia affects global oil prices in any significant way? I would imagine it would lower prices globally.
Don’t refineries turn oil into fuel, like gasoline? To the best of my knowledge countries don’t typically export gasoline, do they? I thought they exported crude.
Wouldn’t being unable to refine crude, mean they need to export more crude, since they can’t indefinitely store it, thus bring down oil prices? In the short-term, I wouldn’t be surprised at an increase in global price due to news media/speculation, but long term effect, I could only imagine global crude price going down.
On the other hand, I would of course think local gas/fuel prices would skyrocket in Russia due to not being able to refine it.
I’m sure I’m very much wrong in my logic; if someone on the internet wouldn’t mind correcting me with a proper explanation. Of course this is all based on refinery attacks, I didn’t read this specific article, but I am not aware of oil rigs/oil extraction sites being attacked (that would clearly be a separate situation if it is happening).
Oil prices in this case is a broad term. Countries that can refine crude prefer to do so, as it makes a lot of money. At the end of the day, the normal person at the gast station doesn’t care if the crude was cheaper or more expensive. They care about what they pay for gasoline.
More specific to the infrastructure often the oil is directly delivered to the refinery and only the refined products make it onto the market at all. So by cutting off the refinery also the oil exploration that comes before is cut off from the market.
Prices are determined based on supply and demand, so any event which decreases the global supply, even in sectors where most of the world was not being given market access, will drive the price up for everyone else.
This is why Biden has been approving drilling projects left and right while transitioning America off the stuff, America’s prices are subsidized, but the world gets squeezed big time by supply fluctuations elsewhere, it’s basically a spooky action at a distance way to try and subsidize global prices to artificially keep them low same as America’s oil prices.