Gasoil stocks held in Asia have jumped since the EU’s ban on imports of Russian diesel came into effect on February 5 as Asian refiners now have to compete with Russia for diesel sales in Africa, traders and analysts have told Reuters.
Ahead of the EU ban on Russian petroleum products, Russia began to divert its oil product cargoes to North Africa and Asia. At the same time, Europe has started to buy more diesel and other fuels from the Middle East, Asia, and North America to replace the lost Russian barrels.
Weekly gasoil inventories at the Singapore hub last week hit the highest level in more than a year, according to Reuters estimates, as Russia is now selling more diesel to Africa, replacing supply from the east of Suez.
The diesel glut in Asia is not expected to last for more than a few months, as demand in the second half of the year is set for a surge, analysts say.
Russia is said to be accelerating its exports of diesel to Saudi Arabia by both direct shipments and ship-to-ship transfers, Reuters reported earlier this month, quoting trade sources and shipping data from Refinitiv.
Using STS loadings, Russia is shortening the routes for tankers headed to Africa and Asia after Moscow is now banned from exporting fuels to the EU.
At the same time, Europe is ramping up imports of diesel from the Middle East and Asia to offset the loss of Russian barrels, of which it imported around 600,000 barrels per day (bpd) before the February 5 embargo took effect.
So far in March, Russian diesel loadings are up by 400,000 bpd compared to February, to “an extraordinarily high” of 1.5 million bpd so far this month, Jay Maroo, Lead Crude Analyst at Vortexa, said in an analysis this week.
“At least for the near term supplies look ample and demand could be threatened, especially in the case of diesel, by wider recessionary concerns,” Maroo noted.
By Tsvetana Paraskova for Oilprice.com
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