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Can Europe Make Do Without Russian Diesel?

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Sanctions on Russia have created an 800,000 barrels per day global deficit in middle distillates, most of it in Europe. And the EU's ban on Russian refined products starting Feb. 5 is likely to make the situation worse. By embargoing the Russian oil trade, legacy buyers of Urals crude and Russian diesel will struggle to supply their domestic markets. Europe must import nearly 25% of its diesel demand, and more than half of that previously came from Russia. Before the Ukraine crisis, Europe imported 1.4 million b/d of refined products from Russia, including at least 450,000 b/d of diesel. Product exports from Russian ports in the Baltic and the Black Sea fell by 600,000 b/d shortly after Russia’s February invasion of Ukraine but have since stabilized to 2.6 million b/d, compared with 2.8 million b/d in 2021. This shows how desperately the world needs those barrels. While more US diesel has sailed to Europe to help offset lower imports from Russia, this has fanned shortages and fueled prices in the US East Coast. The EU ban on Russian crude, due to be enforced from Dec. 5, stipulates that once it is “substantially transformed” — or refined — Russian crude can be re-exported as refined products, including to Europe. Non-EU Turkey, India, and China are buying more Russian crude with a view on re-exporting products to Europe.

Topics:
Oil Products, Diesel/Gasoil, Refining, Crude Oil
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