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Despite the unstable macro environment…
The EU may have a plan to ban all Russian diesel purchases in February, but in the meantime, European buyers are happy to pay more for Russian diesel now than they did back in May, industry sources told Reuters.
The ban on Russian seaborne diesel imports, set to go into effect as part of a larger strategy to cut off Russia’s revenue stream, follows the EU’s crude oil ban set to go into effect in December. Two months later, the ban on Russian diesel imports—and all its refined products—will go into effect.
The discount on Russian diesel was at $30 per tonne in May, according to Reuters—but it is now just $6 per tonne in northwest Europe and $10 per tonne in the Mediterranean on the back of rising demand.
Europe is on a mission to increase its inventories to a level that will carry them safely through the winter months. And for now, Russia’s discount—although smaller than it was in May—still looks attractive.
“Those that can, will buy Russian and stockpile. Gas-to-oil switching has added to demand and we’re switching to winter diesel. This is one of the factors why Russian stuff is not as cheap as it used to be,” one European trader told Reuters.
But not all European countries are buying Russian diesel. In fact, as a whole, Europe has increased its diesel purchases from non-Russian suppliers in September, according to data from Vortexa.
Europe is on track to import 1.65 million bpd of diesel in September, an increase of 190,000 bpd over August levels. Meanwhile, Europe’s imports of Russian diesel totaled 44% of Europe’s total diesel imports so far this month, down from 51% in August and 60% in July. Its intake of Middle Eastern diesel has grown to 30%, up from 23% last month.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.
Then it will be buying the same volumes at even higher prices than now in the form of Russian crude bought and refined by India and shipped to countries of the EU.
A simpler and more logical way of securing its needs of Russian crude, petroleum products and gas at far cheaper prices is by lifting its futile sanctions on Russia.
The EU has no vital strategic interests in a war in Ukraine provoked by the United States against Russia.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert