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Sources say that drone attacks are reducing exports and causing a reduction in Russian oil production.

Three industry sources told Reuters that a Russian oil production cut is imminent due to Ukraine's strike on pipelines, port infrastructure and refineries, which has reduced export capacity by a million barrels / day or 5% of the total, according to their report.

The conflict in the Middle East has already caused unprecedented disruptions in oil supply. A reduction in output from Russia, the second largest exporter in the world, will add to this.

Ukraine intensified its attacks over the past month on Russia's oil-export infrastructure. Ukraine's drone attacks are the most intense of its four-year-long war. They target the Baltic ports Ust-Luga, and Primorsk to weaken Russia’s economy.

According to three sources in the industry, at least 20% of Russia’s total export capability is not working. This is down from 40% last March but enough to have an impact, they say, on Russian oil production. It's the third largest in the world after Saudi Arabia and the United States. Sources spoke on condition of anonymity because of 'the sensitive nature of the situation.

OIL IS CHEKED INTO OIL PIPELINES

Russia's main Baltic Ust-Luga oil port suspended exports last week after heavy drone attacks and fires. Sources said that as Ukrainian drones targeted?both domestic refineries and export infrastructure,' the Russian oil pipeline system was choked up with oil, and storage was filling.

They said that some oilfields would have to reduce production to prevent further flooding of the system.

Russia has benefitted from the rise in oil prices ever since U.S. and Israeli attacks on Iran began at the end of February, but cutting energy production would still hurt as oil and gas account for a quarter state budget revenues.

Limited Pipeline Capacity

Before the Baltic port attacks, Russia's capacity to export oil had already been squeezed. The Druzhba Pipeline, which supplies oil into Hungary and Slovakia since January, was suspended.

Transneft, the state-controlled pipeline monopoly, pumps more than 80% (of Russia's) oil.

Transneft, as well as the Russian energy ministry, did not respond to our requests for comment.

Transneft informed exporters, according to sources, that Ust-Luga could not load oil to meet the initial exporting schedule because of recent damage.

Transneft, according to one of the sources, was also unable import all oil from producers for export via Ust-Luga.

According to the Organization of Petroleum Exporting Countries, Russian oil production was 9.184 million barrels a day in February. Source could not specify how much production might be reduced.

The oil export loading schedule for the first half of April was not expected to be completed, but loading allocations for second half of month were still in place.

RUSSIAN Production Faded Slightly Last Year

According to Russian data, the Russian oil production fell only by 0.8% last year to?10,28 million bpd, which is around a 10th of global output. This was despite Western sanctions as well as Ukrainian drone attacks against refineries.

Sources claim that the bottleneck at Ust-Luga is not just affecting Russian oil exports but also Kazakhstan. Kazakhstan exports between 200,000 and 400,000 metric tons of KEBCO crude oil per month via Ust-Luga.

The sources stated that seasonal oil refinery maintenance in Russia is a major factor in the problem of excess oil in the Transneft System, as the excess grows when the refineries are processing less oil.

In March and April, when Russia performs seasonal refinery maintenance work, it increases crude oil exports. But this time, refinery closures may result in more oil being stored.

No official figures are available on the amount of storage space.

According to one source, there is enough food for a few weeks but not months. Guy Faulconbridge, Barbara Lewis and Guy Faulconbridge (reporting)

(source: Reuters)