Key Russian oil export port in Baltic targeted
Oil exports reportedly suspended after attacks
Strike follows recent hits on refineries, Ust-Luga
A Ukrainian attack has damaged a ship at Primorsk as part of an overnight drone campaign on various Russian targets, Leningrad Governor Aleksandr Drozdenko said Sept. 12, confirming the first hit on one of Russia's largest oil export ports.
The attack, which set the vessel ablaze, represents a further escalation in Ukraine's strategy of targeting Russia's energy export capabilities to undermine its war chest, potentially threatening oil supplies from the world's No. 2 exporter.
"The open fire on a vessel has been extinguished in the port of Primorsk. There is no threat of flooding or oil spills," Drozdenko said on Telegram while confirming a second fire on a pump station that was also put out.
Citing Russian government sources, ASTRA reported unmanned aerial vehicles hit two berths and the Aframax tanker Kusto and some loading operations were suspended. Security Service of Ukraine sources reportedly said their attacks halted oil shipments.
The Ukrainian government agency and Russia's state-owned logistics firm Transneft, which operates in the region, didn't respond to emails seeking comments.
"The strike at Primorsk is new for the oil market," S&P Global Commodity Insights analysts said in a note while suggesting the incident is bullish for near-term crude oil and diesel price sentiment.
Russia has exported nearly 1 million b/d of crude and 400,000 b/d of diesel from Primorsk so far in September, its top export port in the Baltic Sea, according to S&P Global Commodities at Sea. The OPEC+ member has exported 3.46 million b/d of crude and condensate so far this year, of which 892,000 b/d is from Primorsk -- second only to Kozmino on the Pacific coast.
"Beyond the potential impact to crude and diesel exports -- which at this point is unknown -- it is possible that tankers, Russian-controlled or not, may now seek to avoid Primorsk," the analysts said in a note.
At 6:14 pm London time (1714 GMT), the ICE November Brent futures contract was up 0.8% from the previous close at $66.90/b.
Drone pressure
The Primorsk attack is part of a broader Ukrainian drone offensive targeting Russia's Leningrad Oblast region, with the Russian government reporting that defense forces downed at least 30 unmanned aerial vehicles in the area.
The incident marks a significant expansion of Ukraine's campaign against Russian energy infrastructure, which has previously focused primarily on refineries and inland facilities. Primorsk is Russia's largest Baltic oil terminal and a critical export hub for Russia's flagship crude grade, Urals.
The Kusto, sanctioned by the UK and EU, was loading 732,000 barrels of Urals at the time of the incident, according to CAS.
Platts, part of Commodity Insights, assessed the price for Urals on a free-on-board Primorsk basis at $56.755/b Sept. 12, up 2.72% day over day. The Aframax rate for shipping 100,000 mt of crude from the Baltic to India's western coast was assessed flat at $57.50/mt
The Primorsk attack follows a series of Ukrainian drone strikes on Russian energy infrastructure, including a Sept. 5 attack on the Ryazan refinery, Russia's third-largest fuel-processing facility with a capacity of 342,000 b/d. Attacks on the major Syzran and Volgograd refineries have also taken capacity offline, leaving fuel prices close to record highs.
Ukrainian media reported that a Lukoil facility in Smolensk, western Russia, was also struck by drones, although regional officials stayed tight-lipped on the impact of the attacks. A Telegram statement from Regional Governor Vassiliy Anohin confirmed a "massive attack" on the region involving 42 drones, without providing further detail.
Another major Russian export hub in the Baltic, Ust-Luga, was damaged in a Ukrainian drone attack Aug. 24. That strike set fire to Novatek's gas processing facility, which converts stable gas condensate into light and heavy naphtha, kerosene, diesel, and bunker fuel.
Market sources indicated the Ust-Luga attack damaged at least one of three condensate splitters at the facility, with some reports suggesting two units could be impacted. The terminal is a significant transshipment hub for Russian supplies of crude and refined products.