However, the actual loading of diesel fuel from Russian refineries this month may be lower than planned.
Russia plans to increase diesel exports in February as it tries to cope with a European Union embargo, price caps and a shortage of tankers.
Despite the upcoming restrictive measures, it is expected that the total export of diesel fuel and gas oil from the Russian ports of the Black and Baltic Seas in February will increase by 5-10% on a monthly basis, up to 4.2-4.3 million tons, writes Reuters.
Russia has already increased diesel supplies to Turkey and Morocco in an effort to divert oil products ahead of the EU embargo. However, actual diesel loading from Russian refineries this month may be lower than planned, market sources said.
“In addition to the embargo, the shipment of oil products may be affected by stormy weather in the Black Sea ports of Novorossiysk and Tuapse,” said one of the traders.
Delays due to the storm and restrictions on exports at ports can cause disruptions in the supply chain: overloaded railways, overstocked warehouses and curtailment of oil refineries.
Russian refineries may also cut fuel production, depending on yet-to-be-determined price thresholds, traders said.
“If the margin becomes negative, the output of petroleum products can decrease quickly and significantly,” one of the traders added.
Reuters sources added that the lack of available tankers was another limiting factor.
Sanctions against Russian oil and oil products
As reported, at the end of May 2022, EU countries agreed to introduce a ban on the export of Russian oil. On December 5, EU oil sanctions against Russia entered into force.
At the beginning of December, the Council of the EU adopted a decision to set the maximum price for Russian oil at the level of $60 per barrel. The price ceiling means that from December 5, the European Union countries, the United Kingdom, the United States, Canada, Japan and Australia will provide services related to the transportation of Russian oil by sea, only if it is purchased at or below the established limit price.
Also, from February 5, 2023, an embargo on Russian petroleum products, such as diesel fuel and fuel oil, will enter into force. The G7 countries are also introducing price restrictions on the supply of Russian fuel.
However, as reported by Bloomberg, the G7 countries would like to set a higher price ceiling for Russian diesel fuel in order to avoid serious shocks in the market. The EU is considering a cap of $100, while the G7 is proposing a range of up to $110. Nevertheless, the “Big Seven” made it clear that it would be satisfied with the European Union’s decision to set a price ceiling for Russian diesel fuel in the range of $100 to $110 per barrel.
