Smoke rises as a result of the SBU drone attack on a refinery in Ryazan, Ryazan Region, Russia, amid Russia's assault on Ukraine, as shown in a video obtained by Reuters on March 13, 2024. The recent attacks by Ukraine on Russian oil refineries highlight the potential threat posed to global energy markets by affordable drones equipped with artificial intelligence. According to a report published by JPMorgan earlier this month, Ukrainian-launched drones have targeted 18 Russian oil refineries this year, which collectively have a capacity of 3. 9 million barrels per day. Approximately 670, 000 barrels per day of Russian refining capacity are currently offline due to these strikes, as reported by the bank. Ukraine's drone capabilities have expanded to cover larger distances. JPMorgan states that earlier this month, Kyiv successfully attacked Russia's third-largest oil refinery, Taneco, which is located up to 1, 300 kilometers (around 800 miles) away from the frontlines. These Ukrainian drones are now equipped with artificial intelligence, enabling them to navigate and avoid countermeasures, as highlighted by the bank. This AI guidance also enhances strike accuracy by focusing on specific targets, such as distillation towers, whose repairs often require Western technology, making them costly and challenging to fix for Russia. U. S. Defense Secretary Lloyd Austin expressed his concern on Tuesday over these attacks, thereby diverging from U. S. allies in Kyiv and acknowledging the potential impact on global energy supplies. Speaking before the Senate Armed Services Committee, Austin suggested that Ukraine should prioritize tactical and operational targets that could directly affect the ongoing conflict. According to the Financial Times, the U. S.

has advised Ukraine to halt the attacks on Russian energy infrastructure, fearing that they could lead to higher crude oil prices and provoke retaliatory measures from Moscow. This information was reportedly shared by three individuals familiar with the discussions. The JPMorgan report suggests that the losses to Russian refining capacity could worsen, as Ukraine aims to establish a domestic drone industry and produce one million units this year. Should the drones' range extend to 1, 500 kilometers (approximately 932 miles), more than 21 refineries with a refined capacity of over 4. 4 million barrels per day could potentially be targeted, according to the report. John Kilduff, an energy expert and founding partner at Again Capital, warns that this situation could escalate, owing to the reliance on Russian supply to meet global demand, which allows non-Russian suppliers to access alternative markets. Bob Brackett, a senior research analyst at Bernstein, emphasizes that the deployment of AI-equipped drones has broader implications for global energy markets. In a note to clients, Brackett points out that these drones are relatively inexpensive to produce but can cause millions of dollars in damage. Moreover, they could potentially empower non-state actors to challenge superior military forces. Brackett further suggests that these drones could disrupt global seaborne trade, posing a concern not only for oil-exporting countries like Russia but also for oil-importing nations like China and India, which may face disruptions in their crude oil supplies due to drone attacks.