At least three Russian oil refineries have been forced to stop refining or cut production due to significant losses amid export restrictions, rising oil prices and high loan costs.
Source: Reuters
Details: Three refineries – Tuapse, Ilsky and Novoshakhtinsk – have suspended or reduced production in recent months.
The closure of refineries is noted as indicative of the problems of the Russian oil refining industry, which has been under attack from Ukrainian drones, Western sanctions against Russia that force refiners to sell fuel at a discount, and high interest rates.
The crisis is cutting fuel exports and lowering company revenues, leading to lower state budget revenues amid high inflation and uncertainty in energy markets that are already worried about weak demand.
Russia’s lowest-tech refineries, which do not produce premium fuels, have been hit hardest. For several months in the second half of 2024, they suffered losses of up to US$102 per metric tonne.
Russia has 30 large and medium-sized refineries, not including several small refineries, which are capable of processing 5.5 million barrels per day.
Background:
- The Central Bank of Russia decided to raise its key policy rate by 2 percentage points to a record 21% per annum.
- The explosion that occurred on 26 August at the Omsk oil refinery knocked out almost half of the plant’s capacity.
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