NextGen Day

According to data compiled by Anadolu, Russian diesel supplies are likely to find homes in Africa, the Mideast, and Latin America as a result of an impending European Union embargo on Russian refined oil products. The bloc is currently receiving more diesel from Saudi Arabia and the United States, and Russian diesel supplies have already begun to reroute barrels.

On February 5, the EU will put a ban on the importation of Russian diesel, jet fuel, and other petroleum products.

Additionally, the G-7 is preparing price caps for Russian petroleum goods that will go into force on the same day.

However, US Treasury Secretary Janet Yellen stated last week that price controls on Russian oil products are more sophisticated than the price cap that was already put on seaborne Russian crude in December. The exact levels of price caps remain unknown.

She highlighted two different price limitations on Russian petroleum products, one for high-value products and the other for low-value products.

As the days draw closer to the EU’s ban on Russian refined oil products, data indicates that the EU’s imports of diesel from Russia have not decreased significantly since the start of the conflict and that Russia remains the bloc’s top supplier of fuel.

With a daily output of 550,000 barrels, Russia continues to be the leading supplier of diesel. Viktor Katona, a head crude analyst at Kpler, a commodity monitoring, and analytics company, told Anadolu that the price is already drifting downward as some customers reduce their orders before the deadline for the imposition of penalties.

Although it must be noted that December 2022 witnessed the largest amount of imports from Russia since early 2020, as pretty much everyone is stocking up before the sanctions kick in, he said, “month-on-month, the exports are down about 170,000.”

According to Kpler data, the EU imported 719,456 barrels of diesel from Russia each day in December, but between January 1 and 18, that number fell to 542,114 barrels.

According to real-time data tracker business Vortexa, Russia’s diesel shipments to the EU, Norway, Switzerland, and the United Kingdom were estimated to number 615,873 in January.

The total amount of diesel imported into Europe has increased over the past four months compared to the same period in the previous two years by roughly 400,000 barrels per day. In contrast, over the past four months on average, 600,000 barrels per day of diesel have come from Russia, according to David Wech, the chief economist at Vortexa.

In light of this, he claimed that Europe had already acquired replacement barrels at a rate that was two-thirds of its usual need over the previous four months.

Since the beginning of the conflict, US diesel deliveries to European nations have nearly tripled.

The United States and the Middle East are emerging as possible significant suppliers as European nations, which import approximately 2.5 million barrels of diesel per day, struggle to make up for the shortage of Russian supplies.

In terms of diesel shipments to European nations, according to Vortexa statistics, Saudi Arabia ranked second with 267,000 barrels per day in January.

Saudi Arabian diesel exports to European nations were at 88,540 barrels per day in March 2022 and increased steadily since the war’s commencement in February of last year.

By January, US diesel exports to Europe were 156,727 barrels per day, roughly triple their March 2022 level of 54,438 barrels per day.

The volume of US diesel exports to Europe reached its highest point in more than two years.

“Saudi Arabia is producing about 1.3-1.4 million barrels of diesel per day, but has a domestic market that consumes about 600,000 barrels per day and needs to balance its commitments to Europe and Asia, so the upside is restricted,” Katona added.

According to Katona, Kuwait is planning to start up its Al Zour refinery, which will have a production capacity of 615,000 barrels per day and be primarily focused on producing diesel. However, only the first distillation unit is currently fully operational, with trains number 2 and 3 being delayed into 2023.

The intention of Kuwait to increase diesel shipments to Europe “fivefold as an example of how the continent has effectively attempted to diversify its fuel sources,” said EU Commissioner for Energy Kadri Simson last week.

Russian shipments are expected to end up in Africa and the Middle East.

According to Katona, US diesel production averages 5 million barrels per day, with daily domestic consumption hovering at 3.8 million to 4 million barrels.

“Accordingly, there are about a million barrels of diesel per day that are available for free export. Brazil and Mexico have historically been the top destinations for US diesel shipments to Latin America. According to him, more diesel entering Europe would most likely mean more Russian diesel entering Latin America.

There is enough diesel on the market, according to Katona, but existing flows need to be diverted if Europe is to receive a complete supply.

Wech provided information on export volumes from various regions, noting that the Middle East exports about 400,000 barrels daily out of its daily total of 1.4 million barrels, the US ships about 150,000 barrels daily out of its daily total of 1.2 million barrels, and Asia exports roughly 200,000 barrels daily of diesel out of its daily total of 1.4 million barrels to European nations.

This is especially true because, up to this point, Europe has scarcely cut back on its purchases from Russia and has instead taken both Russian and alternative supplies, which has tightened the market globally. In the future, it is likely that Russian supplies will end up in Africa and the Middle East, freeing up corresponding barrels for export to Europe, the analyst predicted.

According to Wech, despite prices “remaining quite high to attract all the necessary long-haul arbitrage inflows,” Europe will still be able to receive the diesel it requires given the market’s current dynamics.

Turkish refineries have an advantage in the worldwide market.

According to Vortexa data, Turkey is one of the nations that increased diesel shipments to European nations.

By January, the nation’s diesel exports had increased from 30,391 and 53,916 barrels per day in February and March 2022, respectively, to 64,277 barrels per day.

Wech noted that Turkey, a net importer of diesel, “plays just a modest role in diesel exports.”

5 million tons of diesel can be produced annually at the STAR Refinery in the Turkish Aegean city of Izmir, and Turkish refiner Tupras can also produce a lot of fuel.

Turkey arguably has the best opportunity of becoming Europe’s “creative supplier,” according to Katona.

“Because Turkey’s refineries are heavily geared toward producing diesel. They can export their own agricultural products to EU nations and then import cheap Russian diesel. This would give Türkiye’s refiners a significant competitive advantage in terms of profitability in an era of intensifying global competition, he said.

According to Katona, Turkey, Egypt, and Algeria might develop into major transshipment hubs for Russian diesel.

Given the current phrasing of the restrictions, just minor manipulation would be needed to convert Russian diesel into, say, Turkish diesel or Egyptian fuel, he continued. “That may ease the disruption in flows.”

Save/Share this story with QR CODE

---

Disclaimer

This article is for informational purposes only and does not constitute endorsement of any specific technologies or methodologies and financial advice or endorsement of any specific products or services.

📩 Need to get in touch?

📩 Feel free to Contact NextGenDay.com for comments, suggestions, reviews, or anything else.

---

We appreciate your reading. 😊Simple Ways To Say Thanks & Support Us:
1.) ❤️GIVE A TIP. Send a small donation thru Paypal😊❤️
Your DONATION will be used to fund and maintain NEXTGENDAY.com
Subscribers in the Philippines can make donations to mobile number 0917 906 3081, thru GCash.
3.) 🛒 BUY or SIGN UP to our AFFILIATE PARTNERS.
4.) 👍 Give this news article a THUMBS UP, and Leave a Comment (at Least Five Words).

---

AFFILIATE PARTNERS

World Class Nutritional Supplements - Buy Highest Quality Products, Purest Most Healthy Ingredients, Direct to your Door! Up to 90% OFF.
Join LiveGood Today - A company created to satisfy the world's most demanding leaders and entrepreneurs, with the best compensation plan today.

---