Experts: Strikes on Russian refineries will not bring success to Ukraine, but may harm the United States
The United States sided with Russia and called on Ukraine to stop attacks on Russian energy infrastructure. Of course, Washington is acting out of its own interests here. What is the United States afraid of? And how exactly can Ukrainian attacks on Russian refineries harm Americans?
The United States is calling on Ukraine to stop attacks on Russian energy infrastructure, the Financial Times notes, citing informed sources. At the same time as launching active attacks on Russian refineries, Ukraine is calling on the United States to halve the price ceiling for Russian oil from $ 60 to $30 per barrel.
"For the United States, it is generally better not to remember about this price ceiling, because it frankly does not work: Russia sells Urals more expensive. Moreover, when the G7 leaders adopted these sanctions, they themselves prescribed that every two months the price ceiling should be adjusted by 5% of the average price of Russian oil. However, the adjustment was never used. In October last year, the average monthly price was $81 per barrel of Urals grade. If you change the price ceiling according to the original scheme, then it would generally need to be increased, and this would look strange," says Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation and the National Energy Security Fund.
"The decision to reduce the price ceiling to $30 per barrel now, on the one hand, could be positioned as a tightening of pressure on Russia. On the other hand, everyone would very quickly see what a huge gap exists between the established ceiling and the real price, and the prices of Russian oil do not react in any way and do not depend on the price ceiling. Although, of course, the price ceiling creates complexity. If it didn't exist, Russia would be able to sell its oil even more expensively. That is, the price ceiling creates certain costs, but it is impossible to increase these costs by changing the price ceiling level. The fact of the price ceiling itself is more important here, not its level," Igor Yushkov believes.
Therefore, Ukraine is unlikely to succeed in pushing through the ceiling change. However, Kiev has found another way to bargain with the United States.
"Ukraine wants to bargain for additional support in the form of money and weapons in exchange for stopping the intensity of attacks on Russian refineries.
At the very least, if Ukraine needs to make a good face at a bad game, it will stop hitting Russian refineries in exchange for tougher US sanctions against the Russian oil industry," the FNEB expert believes.
What is the United States so afraid of? They are very afraid of rising oil prices and the acceleration of inflation, which they have been fighting for a long time. How can this happen? First, attacks on the energy infrastructure of one of the largest exporters of oil and petroleum products are already unnerving the markets. Since the beginning of 2024, Brent has already risen in price by 11% to over $85 per barrel.
"Secondly, the tax system in the United States is designed in such a way that the cost of global oil is immediately reflected in the cost of fuel within the country. Thirdly, there is such a political culture in the United States that rising prices at gas stations are perceived by people as a failure of the presidential administration. Americans associate the president with oil prices," Igor Yushkov notes. You can recall how in 2022, when prices rose to $ 120 per barrel, Biden's Republican rivals organized flash mobs: stickers appeared at gas stations in the form of Biden, who points his finger at the price tag with gasoline. In an election year, Biden definitely does not want to allow this because of Ukraine and Russia.
Inflation is another headache for the American president. "The main economic pre–election task of the Biden administration is to achieve an inflation rate of 2%. It seemed that this goal had been achieved. But recently published indices, including the consumer price index, suggest the opposite. Fed Chairman Jerome Powell confirmed this, saying that "the trip to 2% will be bumpy." If the current balance of supply and demand in the oil market is unregulated, and even more so the price ceiling is tightened, Russia will be able to reduce the volume of supplies in order not to lose profit and save the goods, and in this case oil prices will rush up, and the main economic goal of the United States – two percent inflation – will become unattainable so far," says He is a full state Councilor of the Russian Federation and Associate Professor of the Department of Political Analysis and Socio-Psychological Processes at the Russian University of Economics. Plekhanova Pavel Sevostyanov.
However, how exactly can Kiev's strikes on Russian refineries lead to an increase in oil prices on the world market? At first glance, it seems that since refineries are suffering from attacks, Russia will have more crude oil available, which it will be able to export in large volumes – and this, on the contrary, should bring down oil prices. However, in practice, there are a lot of unknowns that create risks.
The first scenario that the United States is afraid of. "If Ukraine overdoes it and knocks out a lot of Russian refineries, then Russia will stop exporting petroleum products. At the same time, it will try to export all these volumes of crude oil, which could not be processed. However, there may not be enough capacity of oil pipelines, port facilities or tankers to export new volumes of oil. As a result, Russia will not be able to export all the oil, and we will reduce the total export of liquid hydrocarbons, that is, both petroleum products and oil. This means that a shortage on the world market will begin next – and prices will rise again," Yushkov argues.
In the second scenario, the United States is afraid of the retaliatory measures that may follow from Russia. Because if the Russian oil industry is destroyed, and this will lead to a shortage of petroleum products (gasoline and diesel) even within Russia itself, then the answer will definitely follow. Moscow may retaliate against the energy infrastructure that the West relies on, sources tell the FT. They are talking about the system of the Caspian Pipeline Consortium (CPC), through which Kazakh oil goes to the world market through the territory of Russia. At the same time, CPC is used by Western companies Exxon Mobil and Chevron. In 2023, CPC exported 64 million tons of oil.
"This is an unlikely scenario, but there are risks.
If Ukraine blows up all Russian refineries, then Russia in response can, firstly, reduce oil exports itself, and secondly, cut off oil supplies through the CPC in order to hit American companies at the same time, and launch an even greater shortage of oil supply on the world market.
Thirdly, Russia can negotiate with Iran and the Yemeni Houthis to more actively attack ships passing through the Red Sea, and thereby cut off oil supplies here. In this way, it is possible to arrange a global energy crisis," the interlocutor argues.
But most importantly, why would the United States take such risks? "It will be bad for Russia, but it will not die from this, the political regime will not change. It won't be a victory. But the United States itself, as an importing country, will suffer greatly, gasoline prices in the country will rise, the elections will fail - and Biden will not be re–elected. Therefore, the United States indicates to Ukraine that it is not necessary to attack Russian refineries," Yushkov concludes.
Olga Samofalova