Bernstein Americas Oil The drone attacks on Russian refineries are stunning

Americas Energy & Transition Americas Oil: The drone attacks on Russian refineries are stunning (says our real-time satellite/AI refinery tracker)

We remind investors that oil prices are somewhat elevated but refined product Bob Brackett, Ph.D. prices (and crack spreads) are near record levels (Exhibit 1 and Americas Oil: Ignore the facts in front of you...the crack-implied oil price is >$90/bbl).

Minnie Xu While clearly the blockage of the Strait of Hormuz is partially responsible for elevated prices, we remind investors that the ongoing Russia-Ukraine War (in its fifth year of its current incarnation) has evolved into a massive refinery-attacking drone strategy. Raphael Lee We combine real-time satellite imaging with AI web-scraping (with a focus on Ukrainian and Russian language sources). Satellite imaging week combined with reports corroborate 2+ mln bopd of outages just in the last week (Exhibit 2). That is roughly 2% of global refining - a significant amount (especially when coupled with the blockage of the Strait of Hormuz).

The lost refining capacity has forced Russia to ban refined product exports for the remainder of the year (Russia extends diesel, gasoline export bans until end of January 2027 | Reuters), tightening the global market and driving up refined product prices and crack spreads.

We are stunned by the realization that Ukrainian drones have struck ~90% of Russia’s refining capacity in total and ~80% of that capacity just in 2026 (Exhibit 3). It is a technological and military breakthrough that we expect to continue.

Even putting the Strait of Hormuz to the side, without some form of peace or truce between Russia and Ukraine, we’d expect global disruptions to continue at high levels, perpetuating the price difference between refined products and crude (and thus crack spreads) and thus benefitting refiners and integrated oil companies at least into 2027 (ExxonMobil, Outperform, and Chevron, Market-Perform).

Our approach to real-time determination of outages is easily updated upon client request. We provide real-time fire detection images of all Russian refineries (Exhibit 4 to Exhibit 31).

See the Disclosure Appendix of this report for required disclosures, analyst certifications and other important information. Alternatively, visit our Global Research Disclosure Website. First Published: 07 Aug 2026 10:00 UTC Completion Date: 06 Aug 2026 20:12 UTC

Bob Brackett, Ph.D. August 2026

BERNSTEIN TICKER TABLE 5 Aug 2026 TTM Adjusted EPS Adjusted P/E (x) Closing Price Rel. Ticker Rating Cur Price Target Perf. Cur 2025A 2026E 2027E 2025A 2026E 2027E APA (APA) M USD % USD CVX (Chevron) M USD % USD COP (ConocoPhillips) O USD % USD DVN (Devon Energy) O USD % USD FANG (Diamondback) O USD % USD EOG (EOG) M USD )% USD EQT (EQT) O USD )% USD EXE (Expand Energy) O USD )% USD XOM (ExxonMobil) O USD % USD KOS (Kosmos Energy) M USD % USD ( KOS.LN (Kosmos Energy) M GBp % GBP ( SPX 7,709.96 EDME 1,633.76 O - Outperform, M - Market-Perform, U - Underperform, NR - Not Rated, CS - Coverage Suspended EQT estimate is Reported EPS; EQT valuation is EV/EBITDA (x); Source: Bloomberg, Bernstein estimates and analysis.

AMERICAS ENERGY & TRANSITION 2