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Oil Prices Jump 2% on Improving Demand Outlook

Spring Floods Shut Down Oil Refinery in Russia

Strong spring floods have shut down one refinery in Russia as they compromised a dam in the area forcing the evacuation of thousands, the BBC has reported, citing Russian government officials.

Russian media report that the dam breach had sunk the old part of the city of Orsk and the level of water in the Ural River is gradually rising, threatening Orenburg, the administrative headquarters of the Orenburg region in southwestern Russia, near the border with Kazakhstan.

Authorities have reported floods all along the length of the Ural, which flows across southwestern Russia and Kazakhstan and drains into the Caspian Sea.

Kazakhstan has also suffered massive floods, requiring the evacuation of thousands of people.

Russian authorities are warning that some parts of Western Siberia are also in danger of floods as the melting of snow gathers pace. One of these is Tyumen-a major oil-producing region.

These events will likely contribute to a perception of supply tightening on oil markets after Ukrainian drone attacks took about 14% of Russian refining capacity offline in the past few weeks. Different estimates put the total at between 600,000 bpd and 900,000 bpd in processing capacity.

Russia's Energy Minister Nikolai Shulginov said last week that all refineries that were damaged by drone attacks in the country would be restarted by the beginning of June.

"Repairs are underway at the refineries. We plan to re-launch a number of refineries after repairs in April-May, possibly before the beginning of June," Russian news agency Interfax quoted Shulginov as saying.

The United States has repeatedly urged Ukraine to halt its drone attacks on Russian oil refineries due to Washington's assessment that the strikes could lead to Russian retaliation and push up global oil prices. Prices are a sensitive topic for U.S. politicians running for office.

By Charles Kennedy for

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Charles Kennedy

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