Shell’s Refining Costs Hit by 1.72m bpd Russian Export Disruption
Ukrainian drone strikes have halted loadings at Ust-Luga and Primorsk ports, which handle 45% of Russia’s seaborne crude exports (1.72 million bpd). The outage threatens to tighten global oil supply and sustain price floors, pressuring Shell’s refining input costs and trading margins.
1. Ukrainian Drone Strikes Disrupt Russian Exports
Ukrainian drones targeted Ust-Luga and Primorsk ports, halting loadings at terminals that collectively handle 45% of Russia’s seaborne crude exports (1.72 million bpd) and causing a major fire at Ust-Luga.
2. Global Supply Bottleneck and Price Support
The dual port outages remove a significant volume from seaborne markets, tightening global crude availability and underpinning international oil prices after recent Middle East supply tensions.
3. Shell’s Refining and Trading Impact
With reduced Russian shipments, Shell may face higher feedstock costs and must adjust trading positions, potentially sourcing more expensive barrels or redirecting shipments from alternative regions to maintain refinery throughput.
4. Strategic Responses and Outlook
Shell could accelerate supply diversification, increase purchases from non-Russian producers or tap strategic reserves, while monitoring repair progress at Baltic hubs to gauge potential easing of constraints.