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Refiners Prepare for Realignment of Diesel Market

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While some fear a global diesel squeeze after the Feb. 5 EU embargo on Russian refined products takes effect, the world is not short of diesel refining capacity to replace these volumes. However, Europe's diminished refining sector is not equipped to handle the job itself and will need help from refiners abroad. And global refiners will need to rethink how they operate and where they trade to keep the market running smoothly. That's not impossible on paper but poses serious challenges in reality — not least finding enough clean shipping to carry fuel much longer distances. Russia accounted for nearly 40% of European products imports in 2021 and was crucial to making up Europe's historical deficit of diesel production. Since the Covid-19 pandemic, Europe has lost 1.1 million barrels per day of refining capacity, which makes replacing its nearly 500,000 b/d of Russian ultra-low-sulfur diesel (ULSD) imports more difficult.

Topics:
Refining, Oil Products, Oil Trade, Diesel/Gasoil, Jet Fuel, Ukraine Crisis
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