Russia Stands to Lose Billions as Ukraine Drones Target Key Oil Hubs

Russia could lose billions in oil exports, should Ukraine successfully attack the country's major fuel terminals in the Baltic Sea.

On January 18, Ukraine launched a drone attack on a St. Petersburg oil terminal, about 620 miles from the Ukrainian border. It marked the first time a drone had targeted Russian President Vladimir Putin's home region, Leningrad, since the full-scale war in Ukraine began in February 2022.

Another Ukrainian drone attack near the city of St. Petersburg overnight on Sunday struck a major gas export terminal—a Novatek PJSC gas-condensate plant in the port Ust-Luga—causing a huge fire, and halting fuel supplies. Ust-Luga is Russia's largest Baltic port, and Ukraine's Security Service claimed responsibility for that attack, the Kyiv Post newspaper reported.

Should Ukraine successfully strike Russia's two major oil terminals in the Baltic Sea, Ust-Luga and Primorsk, it could halt the export of 1.5 million barrels of oil per day. This could cause the country to lose billions, Bloomberg reported on Monday. Newsweek contacted Russia's Foreign Ministry for comment by email on Tuesday.

The amount of oil shipped by the two oil terminals daily accounted for more than 40 percent of Moscow's total seaborne crude exports on average from January to November 2023, Bloomberg reported, citing industry data.

Russia depends on its oil exports and energy industry, which make up some 30 percent of the country's budget revenues, and are crucial for the funding of Moscow's ongoing war in neighboring Ukraine. In 2023, Russia surpassed Saudi Arabia and became China's largest oil supplier.

Russian oil and gas analyst Mikhail Krutikhin told the independent Russian newspaper Novaya Gazeta in September 2023 that oil companies, due to Western sanctions imposed over the war in Ukraine, have found it more profitable to sell everything abroad.

"That is, to export as much as possible and get at least some money there," said Krutikhin. "Moreover, this is happening throughout the country; even in the Far East, fuel shortages have begun to be felt. They export everything that is possible."

A source in Ukraine's Security Service told the Kyiv Post that the successful assault on the oil terminal in Ust-Luga "not only inflicts substantial economic harm on the enemy, disrupting their revenue streams for the war in Ukraine, but also disrupts the logistical chain of fuel essential to the Russian military.

"This move strategically hampers the occupiers' ability to sustain their forces, marking a significant setback in their ongoing aggression," the source added.

A Russian Telegram channel, meanwhile, said the reason why Ukrainian attacks have managed to reach deep inside Russian territory is that the country's air defenses in the city of St. Petersburg and the surrounding Leningrad region are stretched thin. Putin has pulled the majority of his resources to defend his prized residence at Lake Valdai.

The VChK-OGPU outlet, which purports to have inside information from Russian security forces, said on Sunday that, according to its source, recent drone attacks on St. Petersburg and the Leningrad region are due to an "acute shortage of technical means for detecting small air targets and mobile air defense missile systems capable of shooting them down."

Russia's Pantsir-S1 air-defense systems "were deployed to protect a 'particularly important' facility in Valdai," the Telegram channel said. Newsweek is still working to verify the VChK-OGPU report.

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