Russia Braces For Oil Output Cuts as Sanctions and Drones Hit

LONDON/SINGAPORE, Feb 12 (Reuters) – Russia may be forced to throttle back its oil output in the coming months as U.S. sanctions hamper its access to tankers to sail to Asia and Ukrainian drone attacks hobble its refineries.

The United States imposed sanctions last month that targeted 180 Russian tankers while Kyiv has stepped up drone attacks to improve its bargaining position amid expectations that U.S. President Donald Trump will press Russian leader Vladimir Putin to negotiate an end to the war in Ukraine.

Trump has said stopping the conflict is a priority and that he could impose new sanctions on Russia if his goals are not achieved.

Reuters has spoken to three oil executives and more than 10 traders, refining executives, and port agents about the impact of these latest sanctions.

Three Russian oil executives, asking not to be named due to the sensitivity of the issue, said the reality was clear: Russia will have no choice but to slow oil production.

There is a growing glut of crude in Russia due to falling exports and reduced refining production which can only be addressed by lowering output, they said. Russia has little storage capacity and Ukraine has attacked some of these facilities with drones in recent weeks.

The output cuts could start small, with Russia’s production slipping below 9 million barrels per day (bpd) in the coming months, but may accelerate if tanker shortages and refining outages persist, the executives said.

There are already signs of weakening crude exports in trading data.

Volumes from Russia’s western ports of Primorsk, Ust-Luga, and Novorossiisk in January were down 17% from a year earlier, Reuters calculations based on traders’ data showed.

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