The Peter Zeihan Podcast Series - The Pressure Is Dialing Up on Russia’s Oil Network || Peter Zeihan

Episode Date: September 29, 2025

I've been discussing the potential for Russian crude supply shortages and a broader collapse of the Russian oil system since the Ukraine War started...so, is it finally happening?Join the Patreon here: https://www.patreon.com/PeterZeihanFull Newsletter: https://mailchi.mp/zeihan/the-pressure-is-dialing-up-on-russias-oil-network

Hey all, Peter Zeyn here, coming to you from Colorado, and today we're going to talk about the net effect of all of these recent waves of attacks by drones by the Ukrainians on energy infrastructure in Russia. Now, this is following up to a video I did a couple of weeks ago talking about how we were starting to see some really very real damage in the energy complex of Russia, was somewhere between 15 and 20 percent of the refining capacity going offline. Since then, the Ukrainians have massively upped their target set going and hitting things that are further away. Now, some of these attacks are more political in mind, the ones that hits places like Moscow where the political elite lives, or Sochi down in the Black Sea, where the political elite vacations. But the far more important attacks fall into two general categories. The first one is the Ukrainians are showing that they can hit targets more than a thousand miles away from their borders, specifically a place called Bashkirostan. It's a province in Western Siberia, Eastern European Russia, populated by ethnic Bashkiri, who are a Turkic-Myuanian. minority, pretty large one in the Russian space. But the fun thing about Bashkiristan is it sits at a pipeline nexus that links pretty much all of the southern Siberian energy fields into the European pipeline network. And so if there's meaningful damage in Bashkiristan, you're not just looking at

problems with refining production. You're talking about upwards of three million barrels a day that could get locked in. And the Ukrainians have figured out that going after a pumping station is a really good idea if you want to disable some of the pumping infrastructure. That's part one. Part 2. Pramorsk. Pramorsk is a port on the Gulf of Finland, very close to St. Petersburg. Gulf of Finland is an arm of the Baltic Sea. It is arguably Russia's top export destination, the Gulf of Finland are at large. Not only is there Primorsk, there's a place called Ushluga.

Both of them have been hit recently, and both of them now are operating below half effectiveness. So Pramorsk used to export about a million barrels a day, now it's about half that. Uslugah, it used to be about 700,000 barrels of. Now it's about half that. You put all this together and the Russians are facing a crisis point in their energy sector that honestly I'm a little surprised it hasn't happened to this point. You see, the Russian energy sector has limited export points that are not well linked together. They've got a single spot out on the Far East that kind of is its own network. And then out on the western side, they've got a few ports on the Baltic Sea and the Black Sea and the rest are piped exports that go through Ukraine or Belarus into Europe proper. Those pipelines have now been shut down. that just leaves the maritime ports. And if something happens that would prevent crude from, say, reaching Pormorke, some might be able to go to the Black Sea, but none of it could go out to the Far East.

So the Russians are losing flexibility within their system. And now that we've got roughly three quarters of a million barrels per day of throughput on the Baltic Sea that can't flow, and now that we have 20% of refining offline, all of a sudden there's somewhere in the vicinity of about 2 million barrels a day of crude produce that can't go anywhere. And like the American system where there's massive tank farms in every major city, the Russians don't have that.

They're used to producing crude, sending it to refineries, having it turned into fuel and consumed locally or exported, and the rest goes to an export point and is exported. If you have friction in that system where the fuel can't be produced, then the crude has to go somewhere else. It has to go to a port. And if the ports can't take it, pressure builds up, back in the pipeline system all the way back to the wellhead,

which means if something doesn't change in just the next two or three weeks, there's going to be so much pressure in the system that either we're going to have a rupture in the pipeline, which would be really, really bad for any number of reasons, or the Russians are going to have to shut down their production sites back at the wellhead and lock in a million barrels a day or more. The problem is it's already late September. Winter is almost upon us.

And if these pipes are shut down or if those wells are shut in in the winter, the crude will will will will will will will be able to freeze in the wellhead. And if they want to turn it back on, they can't just flip a switch. They have to redrill the well. And a lot of these wells are either old or reproduced with Western technology, which means it has to be done from scratch with what the Russians can do with themselves or import from the Chinese, which isn't sufficient for the technology required in order to make it all work. So we could be, three years into this war, finally on the urge of a. crude shortage because the Russians just can't play. We'll know real soon. Repairing things like refineries takes time, especially if you're talking about this distillation columns that the Ukrainians have been hitting. The pressure testing that is required to make sure the thing doesn't explode is something

the Russians and the Chinese cannot do themselves. They import all of that from the West. It's going to be a problem getting the parts. And in the case of Pramorsk, not only did the Ukrainians hit a pumping station, They also had a couple of Ghost Fleet tankers. So all of a sudden, whatever insurance the Russian government or the Indian government or the Chinese government has been providing to these ships, all of a sudden has to be paid out. And that hasn't happened yet. And so, lo and behold, tankers aren't going to Primurisk in the volume that they need to be going if the pipeline system is going to stay online. We've been waiting for all of these things to happen, either one or the other, for three years. And all of a sudden, they're all happening at the same time.

It's kind of exciting. Thank you.