Russian Refinery Attacks Worsen Global Diesel Supply Crisis

Two major Russian refineries were attacked and caught fire on August 8, further constraining global crude oil product supply outlook. The Ilsky refinery and Syzran refinery, with a combined annual processing capacity of over 15 million tonnes, have been severely damaged in the attack.

The incident has added to Russia's already low refinery throughput levels, which are at their lowest since 2002. This development is likely to drive up diesel spot prices as global supply tightens.

Not only does the attack on Russian refineries impact diesel supplies, but it also affects other downstream products such as petroleum asphalt and liquefied petroleum gas (LPG). The main futures contract for LPG rose by 65 RMB/tonne on August 7, while asphalt futures saw a significant increase of 106 RMB/tonne.

The ripple effect of the refining sector's supply contraction has also been felt in other markets. Pure benzene prices have seen a modest upward push due to expectations of tight supply, and styrene, another downstream product, has received some bullish support from market participants.