Ukraine attacked Russia and this is good news for 2 Israeli companies

The big gainers are the refineries outside of Russia, who benefit on the one hand from the drop in crude oil prices since the opening of the Strait of Hormuz, which on Sunday stood at about 76 dollars per barrel (a slight increase from the lows), while at the same time high fuel prices translate directly into their profit line. Among the beneficiaries are also the two Israeli refineries – BaZan and BZA.

However, Chen Herzog, BDO’s chief economist, explains that “the damage to refineries in Russia, in addition to damage to refining facilities in the Gulf countries in recent months, has caused a global fuel shortage. “The economic damage is expected mainly in countries without local refining capacity.”

Oil production in Russia: 65% of demand

The Ukrainian attacks on the Russian oil and gas industry, dubbed “kinetic sanctions”, are gaining momentum. According to tracking by commodity analyst Alexander Shtal of The Commodity Compass, all 6 of Russia’s largest refineries have stopped producing or significantly slowed production in recent months. In fact, of the 30 largest refineries in Russia, most of them were attacked in the war, including refineries in cities such as Nizhnekamsk in the Tatarstan region, about 1,500 km from the Ukrainian border.

This means a drop in fuel production capacity in Russia, which is manifested in shortages throughout the country: according to Reuters, fuel production in Russia is now able to cover only 65% ​​of demand.

Gas stations report shortages, and long lines are observed at gas stations that still receive regular supplies. The price of fuel jumps in some places up to NIS 17.6 per liter, according to reports.

In areas such as the Crimean peninsula, which was occupied by Russia in 2014, the shortage is even more severe due to Ukrainian attacks on the fuel supply. To cope, Russia has taken a number of measures such as importing fuel from neighboring Belarus, and completely stopping diesel exports.

Stopping the main export branch

Fuel is a main export industry in Russia, and it is considered a global fuel power: the country exports about 5.2% of the total world trade in fuel, with a value estimated at about 46 billion dollars in 2024.

Therefore, the meaning of the cessation of exports is dramatic not only for Russia, but for the whole world. And the Israeli refuelers are also expected to feel it next month.

According to the Kpler business intelligence agency, total fuel exports from Russia (diesel and gasoline together) dropped from an average of 817,000 barrels per day in 2025 to just 234 per day in the first 10 days of July, and the effect on global supply, which has fallen in recent months, is considerable.

While the price of crude oil now stands at only about $76 per barrel, far from the prices recorded at the height of the war between the US and Israel and Iran, the price of fuel remains extremely high, and has even risen in the last month.

Good news for Israeli manufacturers

The “refining margin”, the difference between the price of crude oil and the price at which the refineries sell the oil products, has jumped in the last month: the margin in diesel is now about $70 per barrel, which means that a barrel of diesel is worth about $70 more than a barrel of crude oil. This is a dramatic increase from June 22, when the gap was about $43.

In gasoline, the margin is about $47, a 4-year high since the beginning of the Russian invasion of Ukraine. This is painful news for fuel consumers, including those who refuel around the world, but also for industry and agriculture that depends on fuel prices.

On the other hand, this is great news for refineries around the world, including the two Israeli refineries: Bazen in Haifa and BA in Ashdod. The refining margin is the basis of their business model, and an increase in the margin translates directly to their profit line.

Accordingly, their shares are also soaring in the last month: BaZen’s share has risen by 16% and ZA’s by 24% in the last month. The higher the margins, the more they will earn in the third quarter that started recently.