Russian Refinery Attacks Tighten Global Crude Oil Product Supply Outlook

Two major Russian refineries suffered attacks on August 8, further reducing global crude oil product supply expectations. The Ilsky refinery, with a capacity of 6.6 million tonnes/year, and the Syzran refinery, with an annual processing capacity of 8.9 million tonnes, were both hit by fires following the attacks. This incident comes at a time when Russian refinery throughput is already at its lowest level since 2002.

The impact on diesel supplies is expected to be significant, driving up spot prices as global demand continues to outstrip supply. Fuel oil and petroleum asphalt markets are also feeling the effects, with futures contracts rising sharply in response to the tightened supply outlook.

Expectations of a tight refining sector have rippled through to other markets, including liquefied petroleum gas (LPG), pure benzene, and styrene. While some price increases have been modest, others are expected to be more substantial, particularly in areas with high demand and low supply.