Russia said on September 21 that it had temporarily banned gasoline and diesel exports to all countries except four former Soviet states to confront a domestic supply shortage, in a move that would disrupt global trade that had already been forced to adapt to Western sanctions on Russian fuel exports. Russia said on September 21 that it It temporarily banned gasoline and diesel exports to all countries except four former Soviet countries to confront a local shortage in supply, in a move…
Russia eased some restrictions on September 25, saying it would allow the export of fuel used to supply some ships, and diesel that contains a high percentage of sulfur. The government has not yet provided a timetable for any further easing of restrictions.
Analysts say importers will have to find alternative sellers so that Russia can replenish its stocks.
What is the reason behind the problem?
The fuel market in Russia, one of the world’s largest oil producers, has been hurt by a combination of factors including maintenance work at oil refineries, difficulties on railways and a weak ruble that stimulates fuel exports, traders said.
Russia has tried to address the shortage of diesel and gasoline in recent months, but has resorted to imposing restrictions on exports to prevent a fuel crisis, which could be embarrassing for the Kremlin as the presidential elections scheduled for March approach.
Deputy Prime Minister Alexander Novak said on October 4 that the restrictions had returned with a positive effect, adding that stocks had increased by 430,000 tons since the restrictions were imposed.
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How big is the problem facing global fuel markets?
The diesel export ban will have the greatest impact because Russia is the world’s largest seaborne exporter of the fuel, followed by the United States.
Russia shipped an average of 1.07 million barrels per day of diesel from the beginning of this year until September 25, which is more than 13.1 percent of the total seaborne diesel trade, according to oil analytics company Vortexa.
Vortexa said that Russia’s importance as an exporting country is less when it comes to gasoline, as it shipped an average of 110,000 barrels per day in the period from January 1 to September 25.
How long will the ban last?
Russia said exports would resume once its domestic market was stabilized, but did not set a time frame.
Kommersant newspaper quoted unnamed sources on October 4 that the Russian government is ready to ease the ban on diesel exports in the coming days.
TASS news agency also quoted Energy Minister Nikolai Shulginov as saying that the government “at all levels” is discussing partial permission for fuel exports.
Analysts including consultancy FGE Energy said the ban on diesel exports could last for up to two weeks before Russia replenishes its stocks and resumes exports.
Expectations vary regarding the length of the ban on gasoline exports. JPMorgan said the ban could last for two weeks until the harvest season ends in October, while FGE Energy said it could take up to two months to replenish Russian gasoline stocks.
Who will be most affected?
After the European Union banned Russian fuel imports due to the war in Ukraine, Russia diverted exports of diesel and other fuels that had been destined for Europe. A Russian ban would change those flows again.
LSEG data showed that diesel supplies from Russian ports to Brazil amounted to about four million tons in the period from January 1 to September 25, compared to 74 thousand tons in the whole of 2022. Russian fuel replaces Brazil’s diesel imports from the United States.
Market sources said that the continuation of the Russian ban on diesel exports for a long period would push Brazil to find an alternative source for up to 400,000 tons of fuel per month.
The dealers added that Turkey was the first destination for diesel supplies from Russian ports after the ban imposed by the European Union, with a total of about seven million tons since the beginning of this year, but it will still be able to buy high-sulfur gas oil.
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Where will replacement supplies come from?
Trade and shipping sources said that African countries are expected to resort to supplies of gas oil and diesel shipped from the Middle East, India and Turkey.
Traders said that importers from Latin America are likely to shift to the US Gulf Coast and the Middle East.
Ship tracking data from Kpler and a source from shipbrokers also showed that diesel exports from the Middle East to Latin America reached an eight-month high of 315,000 tons.
Europe can also fill part of the gap caused by a ban on Russian gasoline exports. FGE said suppliers from northwest Europe, which have lost market share in West Africa to Russian supplies this year, may intervene.
What will the change in fuel trade flows mean for Europe?
Since the ban on Russian fuel imports, Europe has looked for suppliers in other regions, including the Middle East. Competition for these supplies will now increase due to the ban on Russian exports, which will have a knock-on effect on Europe.
As a result, traders said they expect Northeast Asian refineries in China and South Korea to boost diesel exports to Europe.
Kpler ship tracking data and data from a ship brokerage source showed that China exported about 190,000 tons of diesel to Europe in September, and is scheduled to load 45,000 tons in October towards Western countries as well.
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2023-10-04 23:09:38
