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US Defense Secretary Slams Strikes on Russia Oil Refineries as Risk to Oil Markets

In this photo taken from video released by Governor of Bryansk Region Alexander Bogomaz’s telegram channel, oil reservoirs ignite in flames after a Ukrainian drone struck an oil storage depot in the Bryansk Region of Russia.Source: Governor of Bryansk Region Alexander Bogomaz telegram channel/AP
In this photo taken from video released by Governor of Bryansk Region Alexander Bogomaz’s telegram channel, oil reservoirs ignite in flames after a Ukrainian drone struck an oil storage depot in the Bryansk Region of Russia. Source: Governor of Bryansk Region Alexander Bogomaz telegram channel/AP

Peter Martin and Roxana Tiron, Bloomberg News

EnergiesNet.com 04 10 2024

Defense Secretary Lloyd Austin warned that Ukraine’s recent attacks on Russian oil refineries risk impacting global energy markets and urged the country to focus on military targets instead.  

As Ukraine’s battlefield situation has steadily deteriorated in recent weeks, the country has increasingly turned to strikes deep within Russian territory, including infrastructure. The strikes are part of a bid to reduce fuel supplies to the Russian military, as well as to cut revenues from exports that Moscow uses to fund the war. 

“Those attacks could have a knock-on effect in terms of the global energy situation,” Austin told the Senate Armed Services committee Tuesday. “Ukraine is better served in going after tactical and operational targets that can directly influence the current fight.”

Read More: Russia’s Crude Exports Fall Back as Flows From the Baltic Shrink

The US has struggled to balance cutting President Vladimir Putin’s war-fueling revenue from petroleum exports with keeping global energy markets supplied to cool inflation and ease a soft-landing for the global economy. It says its main tool — a price cap on Russian oil exports — has been successful, but concerns are rising as global oil prices hit the highest in almost six months, mainly on Middle East tensions.  

Austin’s remarks were immediately rebuked by Republican Senator Tom Cotton, who accused the administration of discouraging effective Ukrainian action for political reasons. “It sounds to me that the Biden administration doesn’t want gas prices to go up in an election year,” Cotton said. 

President Joe Biden has spent much of his presidency battling inflation, including the price of gasoline for American consumers. 

Russia’s seaborne crude exports in the first week of April fell back from the year-to-date high reached at the end of last month, as shipments from the country’s Baltic ports sagged.

Last week’s drop was driven by fewer cargoes from Primorsk and Ust-Luga, where volumes declined by about 20%, tanker-tracking data compiled by Bloomberg show. The pullback followed a surge in flows from those ports in the final two weeks of March amid the Ukrainian drone strikes on refineries, which may have diverted crude into exports rather than processing.

Ukraine has bombed more than a dozen Russian oil refineries since its air offensive began in early January, including some of the biggest plants in the country, according to Giorgi Revishvili, a former senior advisor to Georgia’s National Security Council. Ukraine carried out one of the longest range drone strikes of the war so far on April 2, hitting an oil refinery in Russia’s Tatarstan region approximately 1300 kilometers (800 miles) from the Ukrainian border, he wrote.

Austin repeated the administration’s plea to Congress to approve additional military aid to Ukraine, arguing that such aid also provides jobs to American workers through increases in US defense production. 

More than $50 billion in the national security supplemental would be spread across more than 30 states, Austin told the Senate panel. That money would boost defense industry work, including munitions and submarines, Pentagon leaders have said.

The defense secretary also answered questions about the Israel-Hamas war, as the committee’s proceedings were paused multiple times while Austin and others spoke by protesters shouting “shame on you” and “stop bombing Gaza.”

Austin echoed Biden in arguing that Israel should do more to address the humanitarian crisis in Gaza and said the US doesn’t have any evidence that Israel is committing genocide in Gaza. But he stressed that mass famine in Gaza would worsen the situation in the Middle East and lead to long-term conflict.

“If Israel wants lasting success it must address the humanitarian needs of the Palestinian people and not in a marginal way, in a meaningful way,” he said. 

–With assistance from Julian Lee.

bloomberg.com 04 09 2024

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