Ukraine War Q&A Series: Why Does Russia Have Oil Supply Issues?

by Peter Zeihan on May 16, 2023

The second question of the Q&A series is…if Russia is such a massive producer of oil and oil products, why are we wasting time discussing supply issues?

The Russian oil problems are best understood when compared to the American system. If you compare California and New York gas prices to those in Texas or Alabama…you might have a heart attack. Outside of the crazy taxes in CA and NY, this boils down to transportation.

Like CA or NY, most Russian oil is produced in one area, refined in another, and then needs to be shipped to its final destination. For the Russians, thousands of miles separate each of those steps. To complicate this supply chain even further, most of this stuff must be trucked into Ukraine since the Kerch Strait Bridge rail capabilities are gone.

The Ukrainians are fully aware of this shortcoming and are now focusing much of their firepower on oil transportation and infrastructure. Destroying refineries is easier said than done, so I would expect the main targets to be fuel tanks, fuel trains, and the occasional pipeline.

Ukraine War Q&A: Why Does Russia Have Oil Supply Issues? || Peter Zeihan

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Categories: Geopolitics

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