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Wednesday, May 24, 2023

Russian diesel exports boom despite EU ban

Despite EU sanctions depriving Russia of its largest market, its diesel shipments are on track to set a record this month.

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Shipments of Russian diesel are set to reach their highest monthly export rate since 2016, Bloomberg reported on Monday.

The increase comes despite Western sanctions and efforts to cut Russia off from the EU market, which was previously its largest buyer of diesel.

Thus far there has been no sign of Russia slashing exports or experiencing a shortage of customers, even though the EU imposed an embargo in February on seaborne imports of Russian oil and petroleum products such as diesel.

Shipments of Russian diesel amounted to 1.5 million barrels a day in the first 19 days of March.

The figure represents a sharp increase on the previous month.

According to the outlet, “this month will see the highest exports in data going back to the start of 2016,” should the current rate be maintained.

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The bulk of Russian diesel cargoes are destined for Türkiye and Morocco as traders push into new markets.

Other countries such as Tunisia, Brazil, and even top oil producer Saudi Arabia have ramped up purchases of fuel from the sanctioned country.

“Russia’s refinery runs remained high so far in March, which allowed robust diesel output,” independent US-based analyst Mikhail Turukalov said.

He added that domestic producers “seem quite confident they can sell their volumes to foreign buyers – the discounts they offer are deep enough and there are new markets for the fuel.”

The EU embargo on Russian oil products prompted Moscow to redirect its trade flows, with diesel cargoes now heading to Africa, Asia, the Middle East, and ship-to-ship (STS) loadings instead of Europe.