With a targeted attack on the Black Sea port of Novorossiysk in the early hours of Friday, Ukraine managed to strike at the “heart” of the Russian economy, cutting off oil exports and driving up crude prices.
The disruption of the flow of 2.2 million barrels of oil per day, equivalent to 2% of global supply, is a serious blow to Russia’s economic infrastructure, limiting Moscow’s ability to finance its military operation. 2 million barrels per day equals about $120 million in losses per day. If it takes two months to repair the damage, it equals $7.2 billion in damage. Plus $9 billion in repair costs. Obviously, if Ukraine continues to suffer like this, Russia will be hurt. If it is an isolated blow, it would not be considered strategic.
This attack highlights the importance of oil exports to Russia, as oil revenues are the main source of funding for the war. Using Neptune cruise missiles and drones, Ukrainian forces targeted critical oil infrastructure, causing serious damage to terminals and pipelines.
All oil operations at the port of Novorossiysk have been halted. It comes only three days after the latest Ukrainian strike against oil infrastructure in neighboring Tuapse. With both oil terminals taken out Russia is currently not loading a single. However, it should be noted that, in Novoroayisk, there is the CPC (Caspian Pipeline Consortium) pipeline that transports oil from Kazakhstan for export from the port of Novo, so who is crying? Russia or Kazakhstan.
Russia, through its oil company Transneft, was forced to suspend oil supplies to the port, while the Caspian Pipeline Consortium temporarily suspended loadings from the neighboring terminal, Yuzhnaya Ozereevka.
This disruption in oil exports is raising serious concerns about global supply and is adding to international pressure on crude prices, with oil prices rising more than 2%.
This attack demonstrated the strategic importance of Ukraine in hitting Russian oil infrastructure and limiting Russia’s ability to finance the war. The destruction of this infrastructure has immediate consequences, as it hits one of the main pillars of the Russian economy.
In the same context, Ukraine has continued to target other strategic facilities, such as refineries and fuel depots, in an attempt to curb Russia’s military machine.
Russian officials report damage to ports, grain and containers in Novorossiysk, while a ship docked in the port was damaged, with three crew members injured.
The disaster, according to local officials, requires an immediate response and restoration of damage, with more than 170 people and 50 pieces of equipment taking action to extinguish fires and restore infrastructure.
