Europe Buys More Russian Diesel Before Ban Rocks Market

A recent news article published in the US News states that Europe Boosts Russian Diesel Buying Ahead of Ban Set to Rock Market.

European traders are rushing

European traders are rushing to fill tanks with Russian diesel as the clock runs down on a Feb. 5 European ban expected to tighten supplies, redraw global shipping routes and increase price volatility.

The ban is likely to create a diesel supply shortfall that Europe hopes to fill with Chinese fuel, some of which will be produced from Russian crude.

China has raised its first batch of 2023 export quotas for refined oil products by nearly half from a year ago.

Its diesel exports, likely to make up most of the quotas, could reach 400,000-600,000 bpd in January-June, said Mark Williams, research director of short-term oils at consultancy Wood Mackenzie.

“But without Chinese exports pushing swing barrels westward, Europe is unlikely to replace the 0.5 million bpd loss in Russian diesel exports come the embargo,” Energy Aspects analysts said.

Import rush

European diesel imports from Russia stand at 770,000 barrels per day (bpd) so far this month, the highest since March last year, according to energy analytics firm Vortexa.

“European buyers are rushing in to import as much as they can ahead of the ban,” said Rohit Rathod, senior oil market analyst at Vortexa.

Russia has long been the main diesel supplier for Europe, where refineries do not produce enough to meet domestic demand from its large diesel car fleet.

Even as governments and companies sought to sever economic ties with Russia after it invaded Ukraine, Europe last year relied on Russia for nearly half of its imports of diesel, known as middle distillates, Refinitiv data shows.