Belgium, (Brussels Morning Newspaper) Traders in the EU are filling their storages with Russian diesel in preparation for the embargo in February.
The bloc is to ban Russian crude oil imports next month and impose the embargo on Russian oil products on 5 February next year, according to Reuters reporting on Monday.
Russian diesel shipments headed for Amsterdam, Antwerp and Rotterdam reached 215,000 barrels per day in the period between 1 and 12 November, presenting monthly growth of roughly 126%, according to Vortexa energy analytics.
Refinitiv data shows Russian diesel accounted for 44% of Europe’s diesel imports in November, up from 39% in October. Russia remains Europe’s main diesel supplier even though Europe lowered its dependence on Russian imports more than 50% since the start of the war in Ukraine.
FGE energy consultancy analyst Eugene Lindell noted that the EU “will have to secure around 500-600 thousands of barrels per day of diesel to replace the Russian volumes.”
Replacement from US, Middle East
“Replacements will come from the US as well as east of Suez, primarily the Middle East and India,” he pointed out.
Lars van Wageningen, operations manager at Insights Global market research company, predicted that Russian diesel will be sold or used quickly as current prices are above those expected in the coming months.
He pointed out that ICE Futures Europe will ban the import of low-sulphur oil products from Russia before the EU embargo comes into effect.
Starting with the end of November, traders will have to prove to ICE that imports in the wider Amsterdam, Antwerp and Rotterdam area (ARA) do not contain any Russian oil.
The area includes Flushing and Ghent, with Insights Global pointing out that December imports will be used in ICE futures trading for deliveries in January.
According to ICE, Russian imports will still be allowed, but will have to be kept in separate tanks from which deliveries will not be allowed.
According to some traders, the ICE move will not have significant impact as ARA storage levels are low and delivered volumes are in decline.
Neil Crosby, an analyst at OilX oil analytics, noted “volumes delivered upon expiry are actually pretty small… it just adds an extra layer of logistical challenge.”