Ukraine strikes Russia's largest refinery from 2,500 km as FGE calls glut fears overblown

Ukrainian drones hit the Omsk refinery, Russia's largest, in a strike Kyiv's General Staff confirmed and that Ukrainian officials say set a range record of more than 2,500 km. Russian crude and product are already off the table for US buyers under sanctions. But every refinery Ukraine knocks offline pulls diesel and gasoline out of the global pool that sets product cracks everywhere, including here.

Omsk is a long way inside Russia. The distance is the news. It tells refiners in Moscow that no plant is out of reach, and it raises the odds of more Russian runs going down through the summer. Tighter global product balances tend to firm up US diesel margins even when the physical barrels never touch a US dock.

The glut question

Fereidun Fesharaki, chairman emeritus of FGE NexantECA, told CNBC on Monday that fear of an oil glut may be overblown. He expects up to 75% of the crude that used to move through the Strait of Hormuz to return to the market by the end of the year. That sounds bearish for price. It isn't the whole picture.

Before the Iran war, FGE looked for oil in the upper $50s to low $60s a barrel next year. Fesharaki now says lower prices aren't guaranteed for 2027, because US-Iran tensions look unlikely to get resolved for good any time soon. Supply coming back and a lasting geopolitical risk premium can sit side by side. For a jobber pricing next year's rack contracts, that means don't bank on cheap crude just because barrels are returning.

Kyiv

In the same window, Russian strikes killed at least 21 people in and around Kyiv. The war is not winding down, which is the practical read for anyone watching supply. As long as the fighting continues, Ukraine has every reason to keep hitting Russian refineries, and Russia has every reason to keep hitting Ukrainian cities and grid. More outages could follow.

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What to watch

Whether Omsk stays down and for how long, and whether product cracks firm in response. Watch how much Hormuz crude actually returns against Fesharaki's 75% call, and whether US-Iran friction keeps a floor under prices into 2027. And watch for the next long-range strike, now that 2,500 km is on the board.