(Bloomberg) -- Ukraine’s recent spate of drone attacks on oil refineries in Russia has led to a question among analysts and traders: will it result in Moscow diverting large amounts of crude — that the plants are unable to process — into the global market place?

The answer is: there are practical limits and political considerations that mean it would be wrong to assume that every barrel of blown-up refining capacity becomes a barrel more exported crude.

US Defense Secretary Lloyd Austin warned last week that Ukraine should focus on military targets because the attacks risk impacting global energy markets. The International Energy Agency estimated Friday that Russian crude exports rose nearly 400,000 barrels a day month-on-month in March. Fuel shipments fell by half that amount.

“This stems from repeated Ukrainian attacks on Russian refineries plus maintenance work,” it said, adding that Russia’s overseas gasoline supplies fell the most amid the nation’s export ban for the fuel.

The most practical barrier to diverting additional flows is port capacity. The highest sustained rates of exports from Russia’s oil ports imply that they could — at least theoretically — handle about 930,000 barrels a day more diverted crude. But that number falls sharply when logistical reality is taken into account.

The most recent drone attack on a Russian oil refinery happened on April 2. 

To get a sense of notional spare capacity, Bloomberg looked at peak sustained flows at any point in the past several years, and then compared them with shipments so far this year. 

The following is a port-by-port breakdown to figure out how much more the country could ship, including effective spare capacity estimates by Bloomberg:

Key Urals Ports

Russia’s Black Sea port of Novorossiysk has a notional spare capacity of 240,000 barrels a day. But that happened at a time when the transshipment of Kazakh barrels — which also go through the port — was very low. 

That may well have given the facility more scope to handle Russia’s own barrels, meaning it’s questionable how much more it could export now. 

Moscow might theoretically give priority to Russian barrels, but there would likely be contractual issues to consider regarding its obligations to Kazakhstan. 

The port is also closest to Ukraine, creating a risk of attack by unmanned aerial vehicles or sea drones. It is also at the mercy of bad weather.

Primorsk, Ust-Luga

Primorsk and Ust-Luga in the Baltic Sea have a notional spare capacity of 365,000 barrels a day between them. 

Connected by pipelines to oil fields in West Siberia and the Volga-Urals basin, they have the most significant collective spare capacity that could be used in the event that crude has to be diverted away from damaged refineries.

In practice, bouts of bad weather, port maintenance and other miscellaneous logistical realities mean the facilities might struggle to maintain exports at their theoretical highs for prolonged periods.

Kozmino Limited

There’s little spare capacity at Kozmino, Russia’s biggest Pacific port. 

The maximum four-week average throughput the facility has handled since the start of 2022 is 995,000 barrels a day. The average flow through its two loading berths so far this year has been about 870,000 barrels a day.

Russia’s oil-pipeline operator Transneft sees crude loadings at Kozmino hitting about 920,000 barrels a day this year — a gain of just 50,000 barrels a day from the levels so far in 2024.

But achieving shipment rates closer to the notional capacity level would require the terminal to operate without a hitch. It has already been closed for several days this year by high winds, which prevented ships from mooring at the berths.

Russia’s ability to get crude to the terminal has already been boosted by the introduction of drag-reducing agents on the pipeline and additional rail deliveries. That shows the effort that’s already gone into keeping flows from the port high.

Production-Tied Ports

The rest of Russia’s main oil ports aren’t really going to help.

In the Pacific, flows from De Kastri and Prigorodnoye are limited by the availability of crude from projects off Sakhalin Island. They can only increase by a theoretical 75,000 barrels a day anyway.

More than 2,500 miles form Russia’s West Siberian oil heartland, the ports have no rail offloading facilities and aren’t connected by pipeline to any other sources of supply than the fields they were designed to serve.

It’s a similar situation in the Arctic. Exports through Murmansk depend on the availability of crude from projects along the Arctic coast. The two floating storage units that make up the export terminal at Murmansk aren’t connected to the Transneft pipeline system. 

In other words, its notional spare capacity — 125,000 barrels a day — is once again likely to be moot, even if it could be tapped.

Bottom Line

The bottom line is that the real spare capacity of Russia’s ports is almost certainly far lower — closer to 500,000 barrels a day — than the notional level.

But port constraints are only part of the picture.

Russia also has untapped refining capacity and that can immediately process barrels before they need to go to the global market as raw crude. It’s also committed to deeper curbs to its crude output as part of a pact with OPEC+. That only muddies the water more.

So far, Russian refiners have been relatively quick in restoring crude-processing rates at facilities that were damaged by Ukrainian drone attacks. Only Rosneft’s Tuapse refinery near the Black Sea remains offline and it is likely to resume operations in mid-May, the IEA said, citing reports.

Domestic Market

The nation has also sought to ensure stable fuel supply to the domestic market, a political priority.

Also, even if barrels were suitable for diversion to the export market, there’s no guarantee they would be. There is no guarantee that, if its refineries were to be targeted, Russia wouldn’t just halt production rather than sell its crude at discounted prices.

As well as domestic imperatives, Russia’s vast grid of pipelines comes with its own infrastructural constraints. 

Finally, Russia’s oil industry isn’t singular and homogenous. There are many actors, state and non-state, each taking its own decisions on what to do about exports, each with its own logistics.

©2024 Bloomberg L.P.