As a follow-up to this diary I published in August 2025 where I outlined the Achilles heel of the Russian economy is that a good chunk of their oil refinery capacity is within Ukrainian drone range. Soon after that diary was published, Macron and Starmer met in Paris, and guess what happened just a few days later? Ukraine hit the Baltic oil terminal port of Primorsk and the LNG terminal on the Baltic, and knocking a good chunk of their petroleum product exporting capabilities off-line. (the other side of the coin, if you don’t refine the crude, you ship it to someone who will)
UPDATE 2X. Well this story is interesting.... Reuters is both the source of the story that the port has re-opened, and that the refinery output across Russia has not been impacted because the refinery network had tons of spare capacity. I smell a rat here, as no other news outlet has published what Reuters has, and the only source would be in the Russian government. So take those 2 Reuters news stories as more of a “Russian denies it, so it must be true” ….
But hitting Primorsk wouldn’t really rattle oil markets, because it isn’t used year-round. (see below)
Fast forward a few weeks, Ukraine gave notice at the next Coalition of the Willing Conference in London that oil terminals will be targets for Ukraine not surprising since they had just hit Primorsk a few weeks earlier. (at the 28:30 mark in the video)
This was not an off-hand remark. This was prepping the financial markets, and giving adequate warning to the world oil markets that Russian crude could be removed from the world supply in the future. Since Primorsk was now only partially functioning, why say anything?
And why now?
Simple. Russian crude supplies to the world in a normal year would decrease starting in September/October because of the increased use in the Russian domestic market in the winter for heating buildings and other producers in the world could increase production to compensate and grab market share without running afoul of OPEC caps. Oil profits are a tricky thing, because demand will fall off a cliff if the price gets too high too fast, so oil producers want to pump as much as they can for as high a price as they can get.
e.g. You don’t sell more heroin by killing your customers, but by keeping them hooked and spending every last dollar they have
It was also to prepare any foreign sailors working on the “shadow fleet”, that their jobs just got a LOT more dangerous.
First, a little geography lesson.
For all its massive amount of land, one thing Russia does not have is a long usable coastline.
So their ports are located where they have a coastline, and ideally, they would have these three features:
1. Near population
2. Not ice-bound for months of the year
3. Easy transit to the open ocean
Their Pacific ports have 2 and 3, but are not near any Russian population centers, which are almost all west of the Ural Mountains, nor are any of them near their major petroleum product producing regions.
Their Baltic ports have #1 and #3, but not #2, because they freeze solid during the middle of winter, and while Russia has the largest fleets of icebreakers, they would not be able to keep the passages free long enough for oil tankers to go in and out.
So what Russian ports DO have all 3 things? Everyone now knows the names of both of them.
Tuapse and Novorossiysk
Guess where they are located?
On the Black Sea.
Basically rock-throwing distance from Ukraine.
If you had been following Ukrainian drone strikes in recent months, Ukraine made a shift a few months ago where they shifted targeting priorities, and began hitting those vulnerable Russian oil refineries like clockwork, but did not hit any port facilities until the Primorsk strike in September. As I mention above, the locations where Russia could export crude to any available buyers were limited by geography and were a massive, yet unexploited Achilles heel for Russia that Ukraine could target basically on a moment’s notice
UPDATE: Novorossiysk, is also the export terminal for the CPC Pipeline originating in Kazakstan, which supplies 1% of the world's crude.…
And going from bad to worse, There are currently a BILLION barrels of crude floating on the world's oceans, as ports refuse to dock shadow tankers
Now, Russia wasn’t stupid. They located a ton of their air defense systems near those ports and may have thought that the Ukrainians would leave them alone because of the air defenses present made them much harder targets to hit and those long range expensive drones could be used against softer targets like refineries, which don’t have robust air defenses surrounding them simply because Russia doesn’t have enough of them to go around.
Well, we now know that Ukraine didn’t hit them because of the potential for disruption to the world crude oil markets, and the air defenses would be taken out by drones whenever Ukraine felt like it.
How do we know that? The video of the explosion on the military base that housed the air defense systems was a MASSIVE mushroom cloud. The drone had a few hundred kilos of explosives, which is far too small to generate that kind of explosion. To make that kind of explosion, that drone had to hit someplace absolutely PACKED with high explosives and something like jet fuel (or solid propellant missile fuel)
UPDATE: (namely, about a dozen to two dozen anti-aircraft missiles loaded into their pods and all close together to supply nearby launchers. There were 4 S-400 Surface to Air defense systems and a Boatload of spare missiles)
So now this puts Russia in a WORLD of hurt, but at this time of year those ports would have had reduced output in any event, since the Russia domestic market was using more as the weather got colder, and Russia was exporting less, but now they are reduced to ZERO.
UPDATE: Novorossiysk is partially back on-line and sending notice that ships can dock there. (There are multiple marine terminals there, so the damage may not have been extensive.
(or the Ukrainians did a precise enough strike to leave Terminal #2 (the CPC one) untouched while torching Terminal #1. (the Russian one)
But now Russia is facing a double whammy of both their Black Sea oil terminals operating at reduced capacity for the next 2-3 months while repairs are carried out (and there is no telling if any sailors would be willing to risk their neck even when they do re-open) (see the note above, the oil has nowhere to go) while at the same time their Baltic terminals are about to be shut down by Mother Nature for the winter. So Russia’s ability to export crude will be probably down by 85-90% of total capacity once the Baltic ports freeze over while the Black Sea ports are being rebuilt and it will remain that way until February at the earliest.
And notice that oil went up only about 2% last week after it happened. The oil market obviously was expecting this, because the loss of a major producer would normally send the crude oil price SOARING if it was unexpected.
Russia now faces a real dilemma in what to do with their oil fields.
I’ll try to explain.
Crude oil fields are a little like carbonated beverages. The oil is recoverable cheaply because it is pressurized by naturally dissolved gases and all you have to do it is open the top. (remember the iconic photograph of the gusher in Pennsylvania in the 1800’s) But what do you NOT want to happen?
Same with carbonated drinks, you don’t want them to go flat, and you want them to remain fizzy as long as possible.
So drilling a crude oil field is like opening a bottle of carbonated drinks, but only leaving a TINY opening to allow as little of the pressure out at a time, with the crude oil going along for the ride.
But if you have nowhere to send the crude oil pumped out of the ground because your ship terminal is wrecked and all the refineries connected to the field by pipeline are also a pile smoking ruins, you have to turn off the fields to preserve them and keep them fizzy. But this also is fraught with danger, as you can wreck a field if you turn it off in the wrong way, (or restart it the wrong way)
The fields also take a long time to both shut down and restart, unless you have to do it quickly, but if you shut down a field quickly, there is a high likelihood that field will go flat. And this article explains that oilfield pumps should be run continuously to prevent damage from freezing water and have to be shutdown carefully in freezing temperatures. But there are THOUSANDS of pumps ALL OVER oil fields and the pipelines and they ALL have to be shut off carefully if there is nowhere to send the output from that crude oil field. Yeah, the Russians are experienced with transporting in frigid temperatures, but shutting down equipment in freezing temperatures is risky, as proper procedures need to be followed across a LARGE swath of their infrastructure to prevent shutdown damage in frigid weather. This is NOT standard procedures when they are widespread across an entire field all at once in frigid temperatures.
And once a field goes flat, the cost to extract the oil is about 3X more expensive, with costs going from $10-20 a barrel to $35-$45 a barrel because water-injection needs to be used to extract the oil (another thing that is a tricky in moderate climates like Texas, but tedious and time-consuming in the Arctic, and almost as bad as natural gas reinjection) and using water pressure to replace the naturally occurring gaseous pressure, thereby absolutely decimating the gross profit margins of those fields from 70% to 10%, and rendering them basically unrecoverable now because of the sanctions discounted price of Russian oil
