Russian Oil Refineries Take a Hit as AI Drones Pose Serious Threat

In this post:

  • 18 Russian oil refineries have been targeted by Ukranian AI drones.
  • The strikes have suspended a huge part of the supply, according to JPMorgan.
  • Ukraine is responding to Russian drone attacks in a similar fashion, as drones range keeps increasing.

Affordable AI drone tech has provided cheap alternatives to expensive weaponry. As Ukrainian attack on Russia’s oil refineries hints at significant dangers for the global energy supply. It has been reported that 18 Russian oil refineries have been targeted by AI drones in Ukraine this year. This has affected the Russian oil refining capacity by 670,000 BP per day from a total of 3.9 million barrels per day, according to JPMorgan.

It is assumed that Ukraine’s fighting capabilities are increasing with the drones’ now capable of longer ranges. But some war experts, like Col. Douglas Macgregor, also argue that NATO’s support has brought Ukraine to a slow death, but the death is inevitable. The views of McGregor, who is a senior analyst, an ex military and also a critic of global wars, are hard to reject. Political commentary aside, Ukraine did attack Russia’s Taneco oil refinery, which is the third largest in the country, and that it is also 1300 kilometers from the battlefront is a fact. But the level of damage could not be confirmed. 

Source: Ourworldindata.

Ukraine’s AI drones

According to JPMorgan, Ukraine is relying on drones capable of artificial intelligence, which makes them able to avoid firing systems and prevent jamming. JPMorgan’s head of global commodities strategy, Natasha Kaneva, informed clients in the April report that, 

“The AI guidance also delivers strike precision, maximizing the impact of the strikes by targeting specific areas like distillation towers, repairs of which requires Western technology.”

She also added,

“This makes the repairs costly and often require equipment that the country is not able to produce.”

Source: CNBC.

The US is not in favor of attacking the infrastructure related to energy production, as it has advised against attacking the oil refineries on the grounds that it will decrease the supply and increase crude oil prices and also encourage Russia for retaliation. but the US has ignored the fact that Russia destroyed the largest power production plant in Ukraine last year.

Source: IEA.

Energy infrastructure and trade routes under threat

AI drone deployment by either side has much more implications for global energy supply and markets as a whole. As drones are affordable to produce, and the damage they inflict is usually in millions of dollars, which makes them an ideal weapon. There are also concerns that this affordability and simpleness of technology may enable nonstate actors to confront much more advanced state forces, causing a global challenge. Founding partner at Again Capital, John Kilduff, said,

“There’s room for this to become a bigger problem because we’ve come to count on Russian supply getting to the global market, which allows other non-Russian supply to go to other places.”

Source: CNBC.

The drones can also pose a threat to the global sea trade, and along with the oil exporters, importers can also be affected, especially the larger ones like China and India, according to experts.

Coupled with the tensions growing in the Middle East, Ukraine’s drone attacks can have a really negative impact on the global energy supply. US crude oil has increased by 20% YTD, and gasoline futures have rallied nearly 33% year to date. 

Russia has said to cut oil production by 471,000 barrels per day in the current quarter to satisfy OPEC commitments. This will cause more strain on the Biden government, which is already facing a tremendous public pressure for supporting Israel’s war on Palestine (Gaza) and allocating bigger funds to fuel the war, termed as genocide and ethnic cleansing across the globe.

Source: IEA.

Current drone strikes might not pose a direct challenge to the oil supply, but they do have indirect effects. And if the drone strikes continue and Russian oil production declines, then the countries that rely heavily on Russian supply will have to sort out other suppliers. Which will increase pressure on those refineries eventually increasing prices. JPMorgan expects that the gas price may reach $4 per gallon by the next month, and this could be a bigger worry for the Biden administration considering the elections ahead. 

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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