Putin Is Afraid Of An Explosion

An expert on when to expect a collapse of the Russian fuel market.

As of now, Russia’s oil infrastructure and fuel market are on the verge of collapse. Ukrainian attacks are literally preventing the situation from returning to normal. Nevertheless, it is still too early to say that Russia’s oil industry has completely collapsed.

This opinion was expressed on the television channel FREEDOM by Boris Aronshtein, an independent analyst of the global energy market .

According to him, as of now, it can be said that Ukrainian drones have managed to put approximately 35% of Russia’s oil refining capacity out of commission.

“Approximately 35% of oil refining capacity was taken out of service at any given time. This data should be interpreted correctly, as there are reports suggesting that this figure reaches 50%. “If we consider the total, then yes, about 50% was put out of commission, but not all at once, rather over a period of time,” the expert clarifies.

He notes that now, since Ukrainian drones have stopped striking oil refineries in Russia as frequently—having shifted their focus to logistics—the fuel situation has stabilized somewhat. But by no means everywhere.

“The fuel crisis has eased slightly now that the intensity of the Ukrainian Armed Forces’ strikes has decreased.” And, at least, major cities are now being supplied more or less satisfactorily. But in rural areas and remote regions, there is a rather serious shortage of petroleum products,” Aronshtein believes.

Returning to the figure of 35% of production capacity shut down, the analyst notes that if this threshold is exceeded, an irreversible fuel collapse could begin in Russia.

“Speaking of 35% of production capacity being taken offline, it should be noted that this is, in fact, a kind of Rubicon: if more than 35% of refineries are taken offline at once, an irreversible collapse of the fuel market—and, in a broader sense, the fuel and energy market—will begin,” says the expert.

The Russian authorities are now frantically searching for ways out of the current situation. Aronshtein considers some of these initiatives pointless. The Kremlin will never agree to the very steps that need to be taken, for fear of social unrest.

“There are more short-term solutions. First and foremost, these involve fuel imports. Previously, decisions were made that were completely detached from reality.” For example, the creation of a network of mini-refineries—that is, the production of straight-run gasoline, which, of course, cannot be used as fuel without secondary processing. Or lowering environmental standards to Euro 3 and, in some cases, even to Euro 2.

I have repeatedly said that the most effective measure would be to deregulate prices and bring the balance of supply and demand to a new level, as well as to reduce the tax burden on the oil refining industry. But this is not being done and, most likely, will not be done,” the analyst concludes.

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