Moscow Hit by 'Largest Attack', Ukraine Strikes Key Russian Oil Facility, Global 'Refining Crisis' Intensifies

Geopolitical conflicts are increasingly impacting global energy infrastructure, with Ukraine's significant drone strike on the Moscow refinery pushing the already tight global refined oil market to the brink of a new crisis.

According to CCTV News, on September 20 local time, the General Staff of the Ukrainian Armed Forces reported that early that morning, Ukrainian forces struck the Moscow refinery in the Moscow region of Russia. The Ukrainian side stated that a large-scale fire broke out in the refinery area, affecting the AVT-6 primary refining unit and the integrated crude oil processing unit. The Ukrainian military claims that the Moscow refinery is one of Russia's largest refining enterprises, with an annual crude processing capacity of about 12 million tons, producing petroleum products such as gasoline, diesel, aviation fuel, and heavy oil. The Ukrainian side stated that this refinery is involved in supporting the needs of the Russian armed forces.

The incident has quickly triggered deep concerns in the market regarding the supply of key fuels for global industry and transportation—diesel. As wars in Eastern Europe and the Middle East simultaneously restrict the export capabilities of key oil-producing regions, global diesel futures and refining margins have surged to historic highs, with U.S. diesel retail prices also breaking historical records.

In the context of a sharp supply drop, the U.S., currently the world's key "last supplier," is facing immense domestic political pressure. Calls are growing in Washington to restrict or even ban diesel exports, with analysts warning that such moves could further disrupt the global energy supply chain and trigger broader economic shocks.

Record Airstrikes Devastate Russian Energy Hub

According to reports from CCTV News and other media, the attack on September 20 was the "largest scale attack" the Russian capital has faced. Moscow Mayor Sobyanin stated that since the 19th, over 1,600 drones have been shot down, with 450 of them intercepted as they approached Moscow. The Moscow refinery suffered severe damage in this attack.

Additionally, according to reports from Global Times, Ukrainian President Zelensky later posted on social media platform X, commenting on the related attack. Zelensky stated in his post that Ukraine's long-range strike on the Moscow region "had a very significant impact". He mentioned that an important Russian oil industrial facility and logistics facility were hit.

Reports indicate that the refinery is owned by Gazprom Neft and is located about 16 miles from the Kremlin, with a daily crude processing capacity of approximately 245,000 barrels (annual processing capacity of about 12 million tons). The General Staff of the Ukrainian Armed Forces reported that the AVT-6 primary refining unit and integrated crude oil processing unit at the facility were struck. This facility primarily produces gasoline, diesel, and aviation fuel, supplying not only the metropolitan area around Moscow but also directly supporting the needs of the Russian armed forces.

In response, Russia has also launched a new round of airstrikes on multiple locations in Ukraine. According to the Ukrainian State Emergency Service and Air Force, the Russian military launched 138 drones, attacking industrial and railway facilities in Kyiv Oblast, Vinnytsia Oblast, and Odesa Oblast, with the attacks in Kyiv Oblast resulting in four deaths so far.

Global Diesel Market in Crisis, Prices Hit Record Highs

The attack on Moscow comes at a time when global diesel supply is extremely fragile. Bloomberg data shows that as supply from the Gulf region and Russia is severely disrupted, global diesel futures and refining margins surged to historic highs last week. The U.S. heating oil crack spread, which measures the difference between fuel and crude oil prices, soared to $117 per barrel, the highest level recorded by Bloomberg since 2009.

Wall Street Journal previously noted that U.S. diesel retail prices surpassed $6 per gallon for the first time last week and further climbed to $6.45 this week, setting a new historical high. Globally, fuel shortages have already been reported at gas stations in rural Brazil, Libya, and some African countries, putting critical fuels essential for global industry, transportation, and agriculture under severe strain.

Bloomberg senior commodity strategist Mike McGlone warned that the current diesel price shock mirrors the explosive rise in gasoline prices during the 2008 energy crisis. Meanwhile, reports indicate that Russia is considering extending its diesel export ban, further exacerbating the already tight supply.

Geopolitical Conflicts Disrupt Decade-Long Refining Landscape

The current predicament of the global refining system stems from the intense collision between the capacity expansion pattern of the past decade and the current geopolitical conflicts. Over the past decade, the Middle East and Russia have invested heavily to expand refining capacity. Kuwait, the UAE, Iraq, and Saudi Arabia have built or expanded large refineries, doubling diesel export volumes from the Middle East between 2017 and 2025, surpassing North America to become the world's largest diesel exporter.

However, according to analysis by the International Energy Agency (IEA), the two wars have abruptly reversed this supply pattern. Since February of this year, disruptions in the Strait of Hormuz have forced Kuwait, the UAE, and Iraq to significantly reduce exports; at the same time, attacks by Houthi forces have compressed Saudi Arabia's export capacity through the Red Sea. IEA senior oil market analyst David Martin stated, "We are witnessing possibly the most tense diesel market situation ever."

Furthermore, Western countries are struggling to fill this gap during the crisis. Alan Gelder, senior vice president of refining at consulting firm Wood Mackenzie, pointed out that massive investments by Middle Eastern countries have long depressed the profit margins of Western refiners, leading to a lack of new refinery construction by major Western oil companies for nearly three decades, with over ten refineries in Europe and the U.S. closing since 2015. Currently, while Western refineries are operating at full capacity and leaning towards diesel production, they still cannot effectively fill the supply gap.

U.S. Export Ban Debate Intensifies Market Uncertainty

In the face of soaring domestic oil prices, the debate over export bans within the U.S. is rapidly escalating. Congressman Tim Burchett introduced a diesel export ban bill this week, and Senate Majority Leader John Thune also expressed openness to the proposal. Trump attributed the rise in oil prices to the Russia-Ukraine war rather than the situation in the Middle East. However, IEA data shows that the volume of diesel blocked in the Gulf is about three times the shortfall from Russia.

Analysts and several think tanks strongly warn that the U.S. export ban will not only fail to resolve domestic issues but will also harm the global situation. The American Petroleum Institute pointed out in a letter to then-Energy Secretary Jennifer Granholm in 2022 that restricting exports would drive up domestic oil prices.

Research from the Center for Strategic and International Studies (CSIS), the Dallas Federal Reserve, and Columbia University indicates that U.S. refining capacity is highly concentrated along the Gulf Coast, with infrastructure designed entirely for export markets. Domestic oil pipelines are currently nearing full capacity, and global tanker capacity is tight. CSIS emphasized in its report that if a ban is implemented, Gulf Coast refiners will inevitably cut back on refining activities due to unprofitability. This will lead to a decrease in domestic gasoline and diesel supply, partially or completely offsetting the initial inventory accumulation, ultimately putting upward pressure on domestic oil prices that the ban intended to suppress and inevitably triggering further price surges in other regions of the world.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.