Europe rushes to fill up on Russian diesel before ban begins
European traders are rushing to fill tanks in the region with Russian diesel before an EU ban begins in February, as alternative sources remain limited.
The European Union will ban Russian oil product imports, on which it relies heavily for its diesel, by Feb. 5. That will follow a ban on Russian crude taking effect in December.
Russian diesel loadings destined for the Amsterdam-Rotterdam-Antwerp (ARA) storage region rose to 215,000 bpd from Nov. 1 to Nov. 12, up by 126 percent from October, Pamela Munger, senior market analyst at energy analytics firm Vortexa, said.
With few immediate cost-effective alternatives, diesel from Russia has made up 44 percent of Europe’s total imports of the road fuel so far in November, compared with 39 percent in October, Refinitiv data shows.
Although Europe’s reliance on the Russian fuel has fallen from more than 50 percent before Moscow’s February invasion of Ukraine, Russia is still the continent’s largest diesel supplier.
“The EU will have to secure around 500-600 kb/d of diesel to replace the Russian volumes, replacements will come from the US as well as east of Suez, primarily the Middle East and India,” Eugene Lindell, refining and products market analyst at FGE, said.
The Russian gasoil heading into ARA tanks is likely to be used or sold quickly as a result of backwardation in Ice gasoil futures, where the current value is higher than it will be in later months, Lars van Wageningen, at Dutch consultancy Insights Global, said.
Part of the influx comes as ICE Futures Europe bans low-sulfur gasoil of Russian origin ahead of EU sanctions.
From Nov. 30, traders must prove to ICE that no Russian product has entered any tanks in the wider ARA region — including Flushing and Ghent — that will be used for January delivery through the ICE futures contract.
Russian gasoil can still arrive in ARA storage tanks in December, but it must be moved to other tanks from which no delivery can be made, according to ICE.
Some market players expect little impact from the ICE move given low storage levels in the ARA for both Russian and non-Russian gasoil as well as declining delivered volumes.
“Volumes delivered upon expiry are actually pretty small ... it just adds an extra layer of logistical challenge,” Neil Crosby, senior analyst at oil analytics firm OilX, said.
In January 2022, 70,000 tons of gasoil were delivered through the Ice gasoil futures exchange’s website shows.
Russian diesel loadings destined for the Amsterdam-Rotterdam-Antwerp (ARA) storage region rose to 215,000 bpd from Nov. 1 to Nov. 12, up by 126 percent from October, Pamela Munger, senior market analyst at energy analytics firm Vortexa, said.
With few immediate cost-effective alternatives, diesel from Russia has made up 44 percent of Europe’s total imports of the road fuel so far in November, compared with 39 percent in October, Refinitiv data shows.
Although Europe’s reliance on the Russian fuel has fallen from more than 50 percent before Moscow’s February invasion of Ukraine, Russia is still the continent’s largest diesel supplier.
“The EU will have to secure around 500-600 kb/d of diesel to replace the Russian volumes, replacements will come from the US as well as east of Suez, primarily the Middle East and India,” Eugene Lindell, refining and products market analyst at FGE, said.
The Russian gasoil heading into ARA tanks is likely to be used or sold quickly as a result of backwardation in Ice gasoil futures
Part of the influx comes as ICE Futures Europe bans low-sulfur gasoil of Russian origin ahead of EU sanctions.
From Nov. 30, traders must prove to ICE that no Russian product has entered any tanks in the wider ARA region — including Flushing and Ghent — that will be used for January delivery through the ICE futures contract.
Russian gasoil can still arrive in ARA storage tanks in December, but it must be moved to other tanks from which no delivery can be made, according to ICE.
Some market players expect little impact from the ICE move given low storage levels in the ARA for both Russian and non-Russian gasoil as well as declining delivered volumes.
“Volumes delivered upon expiry are actually pretty small ... it just adds an extra layer of logistical challenge,” Neil Crosby, senior analyst at oil analytics firm OilX, said.
In January 2022, 70,000 tons of gasoil were delivered through the Ice gasoil futures exchange’s website shows.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
