Ukraine attacks on Russian infrastructure mixed for crude - Goldman

Investing.com - As part of its war with Russia, Ukraine has since mid-March launched drone strikes targeting Russia’s energy infrastructure, attacks which have helped boost oil prices.

At 10:25 ET (14:25 GMT), the Nymex contract traded 0.1% lower at $81.89 a barrel, while the Brent contract dropped 0.2% to $85.88 a barrel. Both contracts are over 10% higher so far this year.

“We estimate that c.900 kb/d of refining capacity is offline now, and that the duration of outages might range from weeks to a permanent loss of capacity,” said analysts at Goldman Sachs, in a note dated March 25.

The influential investment bank estimated that a three-month 1 mb/d refining disruption would boost distillate (diesel, jet fuel) refining margins by $1-1.5/bbl as inventories decline, while a persistent outage would require a c.$2-3/bbl increase to raise the utilisation from other refiners.

The impact on crude is more mixed, Goldman analysts added, with a bearish effect from the decline in refinery demand and a bullish effect from the potential reduction in Russia oil exports.

The bank sticks with its view that crude will see a modest deficit in the first half of the year. 

“An easing in Russia refining or shipping frictions would be conceptually equivalent to a bearish SPR release, that deploys oil back into commercial inventories. This reinforces our view that crude prices have somewhat overshot fundamentals and are likely to consolidate in the short term,” the bank added.