Rosneft stretches refinery repairs from days to months as Ukraine strikes bite

The main effect is on refined products rather than crude. Slower repairs mean Russian refining capacity stays offline for longer, keeping diesel and gasoil exports constrained just as the Northern Hemisphere heating season begins and middle distillate markets are already tight. That supports diesel crack spreads and refining margins elsewhere. When Russian refinery runs fall, more crude is typically freed up for export, which can partly offset the supply impact on crude markets. Even so, Brent near $113 is being driven far more by the risk of renewed US strikes on Iran than by Russia. For US consumers, the news makes a quick fall in diesel prices, now around $6.30 a gallon, even less likely before the midterm elections.---Earlier:Trump invokes Defense Production Act for oil as pump prices bite 12 days before midterms--- Rosneft has concluded that rebuilding refineries only to see them hit again is a losing game, which suggests Russia’s fuel export capacity may stay impaired for months, not weeks.Summary:Rosneft is deliberately slowing refinery repairs at most of its plants, stretching work that could take days into months, Bloomberg reported.Refineries brought back online within weeks of attacks were struck again as repairs neared completion.Rosneft officials have privately warned that the costs cannot be sustained, and that a few more months of war could cause severe, lasting damage to the business.Ukraine’s President Volodymyr Zelensky ended a brief pause on refinery strikes last week, and Ukrainian drones hit Rosneft’s Ryazan refinery the same day.Russia has restricted diesel exports for months because of refinery outages, and seaborne fuel exports fell sharply in early October.The development casts doubt on how much diesel Russia can supply under the deal announced by President Trump. Rosneft, Russia’s largest oil producer, is deliberately slowing repairs at most of its damaged refineries, stretching work that could be completed in days into months, according to Bloomberg. Repeated Ukrainian drone strikes have made the cycle of damage and reconstruction too expensive to sustain.According to the report, refineries that Rosneft restarted within weeks of an attack were hit again as repairs neared completion, wiping out the investment. Company officials have privately warned that the costs cannot be sustained over the long term, and that a few more months of war could inflict catastrophic and lasting damage across the business.The shift comes days after Kyiv resumed its campaign against Russian refining. President Trump announced an energy ceasefire between Russia and Ukraine on October 11, and Ukraine held off from refinery strikes for three days. Zelensky ended that pause on October 15, telling the Financial Times that the restrictions on attacking refineries were over, after Russia kept up its strikes on Ukraine’s energy infrastructure. Ukrainian drones set fire to Rosneft’s Ryazan refinery, which accounts for roughly 5% of Russia’s crude processing capacity, the same day.The cumulative damage is substantial. Ukraine’s defence ministry said earlier this month that strikes had knocked out about half of Russia’s refining capacity, a figure it acknowledged could not be independently verified. Goldman Sachs estimated that Russian refinery outages are about 3 million barrels a day higher than a year ago. Moscow has restricted diesel exports for months to protect its domestic market, and Bloomberg calculations based on Vortexa data showed Russia’s seaborne fuel exports falling to about 980,000 barrels a day in the first 10 days of October before the government relaxed some of those restrictions.Rosneft’s decision has implications beyond Russia. Global diesel supplies are already strained by the war with Iran, attacks on Middle East energy infrastructure and disruption in the Strait of Hormuz. In the US, diesel prices are trading above $6 a gallon ahead of next month’s midterm elections, and the White House has tried several measures to bring them down. Those include a deal under which Russia agreed to supply diesel, starting with 300,000 metric tons and rising over the following months. Analysts noted that even the promised volumes amount to less than two weeks of US demand, and a longer outage at Rosneft’s plants makes it harder to see where the extra barrels would come from.The slower repair approach also changes the economics of Ukraine’s campaign. Kyiv has argued that oil revenues fund most of Russia’s war effort. If Rosneft is no longer rushing to rebuild, outages are likely to last longer, and each strike is likely to have a more lasting effect. The key questions now are whether Washington renews pressure on Kyiv to halt the attacks, and how much refining capacity Russia can protect as the winter fuel season approaches. This article was written by Eamonn Sheridan at investinglive.com.