Oil price rebound alert! Russia's largest oil port attacked, 2% of global supply disrupted

According to industry insiders, Russia's largest oil export port on the Black Sea coast, Novorossiysk, temporarily halted oil exports on Friday, with an average daily export volume of about 2.2 million barrels (accounting for 2% of global supply), after local authorities reported a Ukrainian drone attack.

This is one of the largest attacks on Russian oil export infrastructure in recent months, occurring after Ukraine ramped up strikes on Russian refineries in August, aiming to weaken Moscow's ability to finance the war.

Due to supply concerns, international oil prices rose by more than 2% on Friday.

Ukrainian long-range aerial and maritime drone attacks have disrupted Russian oil infrastructure multiple times this year, targeting Baltic and Black Sea ports, trunk pipeline systems, and several refineries.

"Ukraine also launched cruise missiles"

Ukrainian President Zelensky said on Friday that Kyiv also launched long-range "Neptune" cruise missiles at targets inside Russia overnight, adding that such strikes are "increasingly successful." He did not mention specific targets.

Sources told Reuters that Russian oil pipeline company Transneft was forced to suspend oil supply to Novorossiysk port. The company declined to comment.

The Caspian Pipeline Consortium (which exports oil from Kazakhstan via the nearby Yuzhnaya Ozereyevka terminal) suspended oil loading for several hours until the air raid alert was lifted and operations resumed. The consortium plans to export 1.45 million barrels/day of oil from the Yuzhnaya Ozereyevka terminal (about 15 kilometers southwest of Novorossiysk) this month.

According to Interfax, drone debris fell in the area of Russia's NKHP grain terminal, but the terminal continued to operate normally, said general manager Yury Medvedev.

Damage caused by the attack

Russian officials said Friday's attack also damaged a docked ship, an apartment building, and an oil depot in Novorossiysk, injuring three crew members.

Transport and logistics company Delo said drone debris fell at a container terminal in Novorossiysk, but business continued as usual.

British maritime security company Ambrey said a crane and several containers were damaged. A non-sanctioned container ship docked at the terminal suffered some collateral damage, but no one was injured as the crew took refuge at the ship's safe muster point.

"Novorossiysk suffered the most damage"

According to industry sources, in October, Russian crude oil shipments through Novorossiysk's Sheskharis terminal reached 3.22 million tons (about 761,000 barrels/day). In the first 10 months of this year, the figure was 24.716 million tons.

Other sources told Reuters that the total volume of oil products exported through Novorossiysk in October was 1.794 million tons, and the total export volume of oil products from January to October was 16.783 million tons.

Three industry sources said the Ukrainian attack hit two berths at the Sheskharis terminal. Berths 1 and 1A handle tankers of 40,000 and 140,000 deadweight tons, respectively.

Two of the sources said the Arlan oil tanker, flying the Sierra Leone flag, was also hit in the attack.

"Novorossiysk suffered the most damage," said Veniamin Kondratyev, governor of the Krasnodar region where Novorossiysk is located, on social media. "Overnight, more than 170 people and 50 pieces of equipment participated in the post-attack cleanup, quickly extinguishing the fire and helping residents."

Kondratyev said the three injured crew members from the damaged ship are being treated in hospital.

Local officials later said the fire at the oil depot at the Sheskharis terminal (which handles crude oil and oil product exports) had been extinguished. They said coastal structures were also damaged but did not provide details.

Reuters could not verify the specifics of the attack, and Ukrainian officials did not immediately comment.