The Old Continent's reservoirs are filling up at a rapid rate, after the price of Russian crude collapsed after the cap was imposed
Europe will ban the import of Russian oil products 5 February - move, which is already causing huge changes in the global diesel trade. Buyers are rushing to stock up on Russian diesel, with flows this month on track to reach a one-year high.
Impending ban
The European Union banned the import of Russian crude oil by sea from 5 December and will ban Russian petroleum products from 5 February in progress, aimed at depriving Moscow of revenue.
The Group of Seven most advanced economies (G-7), as well as Australia and the 27 countries of the European Union, introduced on 5 December and a cap on Russian crude oil prices.
This allowed non-EU countries to continue importing seaborne Russian crude oil, but will prohibit the transport ones, insurance and reinsurance companies to handle cargoes of Russian crude around the world, unless sold for less than 60 dollars.
Prices of Russian Urals crude fell in December and it is sold to countries like India well below the ceiling, according to trade sources. That's right, although Russia said, that it will not respect the ceiling, even if it has to reduce production.
The ships, carrying Russian crude oil, loaded before 5 December and unloaded at their destination before 19 January, will not be subject to the price cap, according to the US Treasury Department.
G-7, including the United States, Australia and the EU, are developing a similar price cap mechanism for Russian refined fuels, like diesel, kerosene and fuel oil, which to act from 5 February.
There will be products, which trade at a premium to crude oil, as well as these, which trade at a discount, according to a G-7 official.
But experts are trying to find a realistically working mechanism to cap the prices of refined fuels. Capping the prices of petroleum products is more complicated than setting a price ceiling for crude oil, as there are many petroleum products and their price often depends on where they are purchased, and not from where they are produced.
Diesel prices
Because Europe is highly dependent on Russian diesel imports, the ban from 5 February is expected to support profit margins for fuel, say analysts.
WoodMac expects European diesel margins - profit, which the refinery theoretically makes from processing crude oil into diesel – to be average 38 dollars per barrel in the first half of the year, more than twice the average for 2018 – 2022 G., based on Reuters calculations.
Diesel flows fast
European diesel imports are average 700 000 barrel per day (bpd) so far this year, which is the highest level since March 2021 G., according to oil analysis firm Vortexa. The reason for the accelerated import is the fact, that traders are rushing to fill the tanks before the ban.
At the same time, Europe is increasing its imports of diesel from Asia and the Middle East - the two regions, which are expected to take the majority of its exports after the ban comes into force.
Source: https://www.economic.bg/bg/a/view/evropa-trupa-dizel-predi-ruskata-zabrana