Max Pyziur, analyst at the American Energy Policy Research Foundation

Ukraine continues to successfully apply long-range sanctions against Russia’s oil and gas infrastructure, which has become part of the Kremlin’s war machine. It fuels the war both directly — by providing fuel for aviation and other military equipment — and indirectly, through revenue flows into the Russian state budget.

Ukrinform discussed the situation in Russia’s oil and gas market, the impact of the war in Iran on global oil markets, and the political situation in the United States with American analyst Max Pyziur, Director of Downstream, Transportation Fuels, Natural Gas, and Electricity Projects at the Energy Policy Research Foundation.

THE SITUATION IS ALREADY BEING IMPAIRED IN RUSSIA AND IT SHOULD BE FURTHER DEGRADED

– Mr. Pyziur, let’s start with the main point: how have Ukrainian strikes reduced Russia’s oil production and exports?

– Well, certainly its refining sector and petroleum products exports have been impaired. There has been a shift in the balance: you have a decline in petroleum products exported from Russia, and an increase in available crude oil exports. For the most part, Russia processes its own crude oil domestically to produce petroleum products. So the overall export volume does not appear to have changed significantly — meaning crude oil plus petroleum products combined. It’s just that petroleum products exports have declined, while crude oil exports have increased.

Now Ukraine is attacking both the terminals and the refineries. So if you impair the refining sector, you cannot process the oil.

– Do you remember the specific numbers?

– Originally, crude oil exports were about 3.5 million barrels per day, with perhaps another 2.5 million barrels per day in petroleum products exports. Now that balance has shifted to maybe 4 million barrels per day of crude oil exports and 2 million barrels per day of petroleum products exports. So altogether it is still around 6 million barrels per day combined, but instead of roughly 3.5 and 2.5, you now have 4 and 2.

– What is the volume of oil extraction itself in Russia? As far as I know, these figures are not published. How much oil do they actually extract?

– That part is not being impaired. In other words, crude oil extraction itself — the oil being pulled out of the ground — is not what is being targeted.

Russia produces, I think, close to 10 million barrels per day. It is roughly on the same level as Saudi Arabia.

– They do not disclose this data; they do not publish it.

– You can estimate it algebraically. In other words, if you know how much is exported as petroleum products and how much is exported as crude oil, you can infer what remains. That is how most analysts estimate it. Most assume Russia produces between 9 and 10 million barrels per day.

If you want an annual figure, you simply multiply 9 to 10 million barrels per day by 365. But generally, production is discussed in daily terms.

– So, does that mean this does not affect Russia’s budget revenues if extraction and production volumes remain the same?

– It does affect the budget. Earlier, the G7 countries imposed cosmetic sanctions that limited the price of oil transported by sea, and this did not affect them in any way.

Once the accelerated sanctions took effect — I think around August 2025 — they reduced the price Russia could receive for its exports. Consequently, Russia collected less in export duties and had less revenue flowing into the national treasury.

So export volumes did not change significantly. What changed was the amount of revenue the Russian state was able to collect.

With Hormuz, however, the situation shifted after March 1, and oil prices rebounded. Russia is now maximizing the amount of money it can bring into the national treasury.

– Ukrainian media often report that the West repeatedly urged Ukraine to stop striking Russian oil facilities. Is that true? Do you think it is true?

– Yes, I think it is true. But Ukraine does not necessarily have to pay attention to that anymore.

It is a question of survival. I have not recently heard anything consistent or sustained in that regard, but from time to time the Trump administration does try to influence the Zelensky administration to curtail such actions.

However, the weaponry being used is Ukrainian, not American, so there is no direct American control. Since the weapons are Ukrainian-controlled, Ukraine has the discretion to act as it sees fit.

– So, it makes sense to continue targeting Russian infrastructure?

– Absolutely! Absolutely! I think the situation is already being impaired in Russia and it should be further degraded. You know, the goal should be for Russian politicians and Putin himself, I mean, to take Putin out.

He's the politician who ordered the invasion of Ukraine, ordered destruction, the cultural annihilation, of the people. Hell yeah. Take note, that's where the war should come on to his doorstep.

THERE ARE ABOUT 100 MILLION BARRELS OF RUSSIAN OIL IN THE SEA

– I would like to focus a bit more on the Strait of Hormuz. How has it changed the oil market situation? How much has Russia benefited from it?

– The headline figure is that about 21 million barrels per day move through the Strait of Hormuz. In reality, roughly 14.5 million barrels per day are crude oil, while the rest consists of petroleum products.

On the crude oil side, there are many ways to offset disruptions: rerouting shipments, using strategic petroleum reserves, and drawing on floating storage. Saudi Arabia alone can divert around 7 million barrels per day of crude oil exports to the Red Sea.

As a result, the net global loss to crude oil markets is closer to 3.5 million barrels per day.

The larger issue is petroleum products. About 6.5 million barrels per day moving through the Strait of Hormuz are petroleum products — gasoline, diesel, jet fuel, and marine fuels used by ocean-going vessels.

These products are much harder to replace. As a result, there is now a global shortage of petroleum products that is negatively affecting economies heavily dependent on these supplies, including Japan, China, India, Pakistan, and several African countries.

Another issue is fertilizers. About 10% of the world’s nitrogen-based fertilizer passes through the Strait of Hormuz. In addition, approximately 10.5 billion cubic feet of LNG exports from Qatar have been disrupted.

All of this is adversely affecting economies that are highly dependent on supplies coming through the strait.

In the United States, the impact is mainly visible through higher prices for petroleum products — diesel, gasoline, and jet fuel. However, because the United States can produce its own petroleum products, there are no major shortages.

Where shortages are beginning to emerge is in Europe, which is heavily dependent on imports, lacks sufficient refining capacity, and also lacks adequate storage capacity for petroleum products.

– And how much Russian oil is currently at sea on tankers?

– The last figure I saw was around 100 million barrels in floating storage. That is a very large amount — roughly equivalent to about 50 very large crude oil tankers.

And again, going back to the point I made earlier: while around 14.5 million barrels per day normally move through the Strait of Hormuz, countries can draw on Russia’s floating storage instead. Consequently, for at least the next 120 to 200 days, they can rely on Russian floating storage and be less dependent on oil supplies that would normally come through the strait.

– Which countries exactly?

– China and India. They are the biggest customers for Russian oil, and possibly Korea and Japan as well.

– India buys oil from Russia, refines it, and then sells it to Europe. Is that correct?

– Yes. The largest refinery in the world is located near Mumbai — the Reliance refinery — and it processes about 1 million barrels per day.

For comparison, the largest refinery in the United States processes around 600,000 barrels per day. That is the Motiva refinery in Port Arthur, Texas, a subsidiary of Saudi Aramco. So Saudi Arabia effectively owns the largest refinery in the United States.

Regarding India: the Reliance refinery on the west coast near Mumbai has a capacity of about 1 million barrels per day and operates at a very high utilization rate, close to its nameplate capacity.

India itself does not have sufficient domestic demand to absorb all of that output, so it exports refined products. These are shipped to Europe, East Asia, and likely now also to Australia, which has a significant shortage of jet fuel.

– So, Europe is actually a major customer for Russian oil — not directly, but through India?

– Yes.

THE UNITED STATES IS TRYING TO WEAN ITSELF OFF RUSSIAN URANIUM

– Now a question about Hungary. Orbán has just left office. Will Hungary continue buying Russian gas and oil?

– I mean, they already do. As far as I understand, the current contract runs through 2029. So if Ukraine continues honoring the agreement, it is obligated to keep transporting crude oil through the Druzhba pipeline. There is still a customer on the other side.

– Do they have the possibility of switching to other suppliers?

– They can buy from other sources, but pipeline deliveries are cheaper than transporting crude oil by barge along the Danube.

The Hungarian national refining company, MOL (Magyar Olaj), has a large refining base. They supply Slovakia, and they also have gas stations in Romania.

– What about relations between the United States and Russia in the energy sector? As far as I understand, the United States does not buy Russian oil products. But what about uranium?

– I think the United States is trying to wean itself off Russian uranium.

This goes back to the dissolution of the Soviet Union and the agreements that followed. In order to reduce the threat posed by Russia’s stockpiles of nuclear materials, the United States helped establish a system for converting weapons-grade uranium into the lower-enriched uranium used in nuclear power plants.

So you take highly enriched uranium — weapons-grade uranium — and downgrade it into reactor-grade uranium suitable for civilian nuclear energy use.

The United States, I believe, financed both the processing itself and the purchase of this downgraded uranium from Russia as part of that program.

I think that process is gradually coming to an end. Most, if not all, of the weapons-grade uranium intended for conversion has already been downgraded.

As a result, the United States will increasingly need alternative uranium suppliers. Major uranium-producing countries include Canada, Australia, Kazakhstan, Ukraine, and Russia.

– How do American politicians view these long-range sanctions against Russia?

– Publicly, many politicians say they support sanctions. But generally, Republicans vote in line with whatever policies the White House proposes or supports. So they may say one thing publicly, but their actions tend to align with the Trump administration.

Democratic politicians may both speak and act in ways that are more critical of Russia, but for now they do not control the political system at the national level. Both houses of Congress are controlled by Republicans, so even if Democrats tried to force a vote, it would most likely fail.

– And what are your predictions for the midterm elections?

– I think right now the general expectation is that the House will flip and become Democratic-controlled, although I do not know by what margin. As for the Senate, Republicans may lose some seats, but they will probably still maintain control with around 51 votes.

But things can change. You are already seeing more criticism among Republicans regarding the war the Trump administration engaged in against Iran. Recently, a vote was held on the War Powers Act, which failed, but if earlier the result was 53-47, this time it was 51-49.

So two Republican senators joined the Democrats — Murkowski of Alaska and Susan Collins of Maine.

Volodymyr Ilchenko, New York