Since August, Ukraine's strikes on Russia's energy infrastructure have escalated in an effort to undermine Moscow's war efforts as well as revenue streams. Ukraine has struck at least 10 refineries, at one point cutting refining capacity nearly one-fifth.Important Baltic ports such as Ust-Luga and Primorsk have also been damaged.

Oil Revenues at Stake
Long before now, oil and gas have been the backbone of Russia's federal budget, providing as much as 50 percent of total income. Transneft, which moves more than 80 percent of Russia's oil, has already curtailed the capacity for companies to store crude in Transneft's pipeline system. Producers have also been notified that the system might not be able to accommodate all of their oil if there is further damage.

Russia accounts for approximately 9 percent of global oil supply, and a forced cut in production could alter international oil markets, though Moscow has not disclosed the extent of damage from the drone attacks or the ultimate impact they might have on oil exports.

Ports Under Pressure
Last week, Ukrainian drones hit Preforsk, Russia's largest oil port and made it temporarily inoperable. Preforsks alone has a capacity to export more than 1 million barrels of oil per day or approximately 10 percent of Russia's overall production. President Volodomyr Zelenskyy dubbed the attack on energy assets "the sanctions that work the fastest."

Although some operations have resumed on Saturday, full repairs will take time. Russia lost some exporting capacity already in August when Ust-Luga was struck. Unlike OPEC leader Saudi Arabia, Russia has a more limited storage capacity and faces issues balancing supply disruptions.

According to the OPEC+ agreement in place at the moment, Russia's target rate for quota was to rise to approimately 9.449 million barrels of oil per day in September after reporting to an overall target rate of approximately 9.344 million bpd in August. Analysts from J.P. Morgan and Goldman Sachs have reported that production might fall marginally due to losses of refining capacity and storage capacity, with increasing demand coming from Asian buyers.