Europe is scrambling to buy diesel fuel from Russia before a ban on imports comes into force in early February, but the frantic stockpiling is unlikely to prevent a new price shock for truckers, drivers and businesses. Since Russia’s invasion in February last year, the European Union has made a huge effort to wean itself off Moscow’s oil and natural gas supplies. That has included a ban on all Russian seaborne crude oil imports, which came into force in December. In the last three months of 2022, the bloc imported an average of 604,000 barrels per day of Russian diesel via seaborne tankers, compared to the 508,000 barrels per day imported during the same period the year before, Vortexa data shows.
The EU ban will tighten the global market for diesel, Williams said, unless Russia can successfully divert its cargoes to Latin America and Africa, regions which typically import from the United States. That would free up US barrels to be sent to Europe, plugging the gap left by Moscow, he said. But importing diesel from suppliers further afield, including the United States and Saudi Arabia, will push up freight costs, feeding into higher consumer prices, he said.
According to Wood Mackenzie’s estimates, the price of a barrel of diesel will average $40 for the first three months of this year. That’s up a whopping 470% from the average price for the whole of 2021, before Russia’s invasion sent prices soaring. The average EU cost of a liter of diesel at the pump hit €1.77 ($1.92) on January 9, up from €1.50 ($1.63) the same time last year, data from the European Commission shows.
France Hit Hard
France could be hit especially hard. Europe’s second largest economy is also its biggest buyer of diesel, responsible for 22% of all seaborne imports over the past three years, according to Vortexa data. But Jorge León, a senior vice president at Rystad Energy, told CNN that the impact of the ban won’t be felt immediately in Europe because of the large amount of diesel in its stocks.
The European Union has also “done its work to find alternative suppliers,” he said, including Kuwait, which opened a massive oil refinery in November capable of producing 600,000 barrels per day of diesel. That could help cushion the impact of losing Russian supplies.
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