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Ukraine Intensifies Drone Strikes on Russian Oil Facilities Amid Windfall

Ukraine has ramped up drone attacks on Russian oil refineries and export terminals, targeting critical infrastructure to disrupt Kremlin revenue. Concurrently, Russia is experiencing a windfall from high crude oil prices and partial sanctions relief, potentially doubling its oil earnings. President Zelensky frames the strikes as retaliation for Russian attacks on Ukraine's energy grid. In response, Russia plans a gasoline export ban from April 1 due to production issues from the strikes and maintenance. The ongoing war influences global oil markets, with Russia's budget heavily reliant on energy exports.

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Ukraine Intensifies Drone Strikes on Russian Oil Facilities Amid Windfall

Ukraine has escalated drone attacks on Russian energy infrastructure, targeting refineries and export terminals, while Russia benefits from high oil prices and sanctions relief.

Escalation of Drone Campaign

  • Ukrainian military claims 10 major attacks this month on Russian energy sites, part of a campaign started last summer.
  • Strikes include deep inside Russia, aiming to cripple a key revenue source.

Key Targets and Impacts

  • Yaroslavl refinery: Direct hit reported, fire ensued; regional governor acknowledges damage to residential buildings and a commercial facility, claims 30+ drones neutralized.
  • Ust-Luga terminal: Attacked twice, damaging oil-loading stands and a tank farm; geolocated video shows large fire, and St. Petersburg warned of air pollution.
  • Primorsk port: Also attacked last week, with fires visible as of Saturday.
  • Saratov refinery: Operated by state producer Rosneft, struck last weekend.
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Russian Oil Market Dynamics

  • Russia's oil earnings may have doubled due to surging crude prices and US sanctions relief on crude already at sea.
  • Russian crude now sometimes trades at a premium globally, compared to pre-Middle East conflict discounts.
  • Oil revenue accounts for at least one-third of Russia's state budget.

Zelensky's Justification and Criticism

  • President Zelensky states attacks respond to Russian strikes on Ukraine's energy infrastructure, causing winter outages.
  • Claims Ust-Luga's capabilities reduced by 40% after drone strikes.
  • Criticizes sanctions relief, alleging Russian intelligence aids Iran in targeting allies with satellite imagery.

Russian Government Response

  • Planning to reintroduce gasoline export ban from April 1, discussed by Deputy PM Alexander Novak and industry bodies.
  • Ban aims to address domestic market shortages from producers chasing export profits and unscheduled refinery maintenance from attacks.
  • Similar ban was imposed last September but lifted in January.

Broader Context

  • Conflict persists amid global oil market volatility from Middle East tensions and Strait of Hormuz disruptions.
  • Ukraine's campaign seeks to weaken Russia's war funding, while Russia adapts to infrastructure damage.
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