Europe is rushing to fill up on Russian diesel before the ban begins | Popgen Tech


LONDON, Nov 21 (Reuters) – European traders are rushing to fill tanks in the region with Russian diesel ahead of an EU ban starting in February, as alternative sources remain limited.

The European Union will ban imports of Russian oil products, which it relies heavily on for its diesel, by February 5. It will follow a ban on Russian crude that comes into effect in December.

Russian diesel cargoes destined for the Amsterdam-Rotterdam-Antwerp (ARA) storage region rose to 215,000 bpd from November 1 to November 12, up 126% from October, said Pamela Munger, senior market analyst at energy analysis firm Vortexa , said.

With few immediate cost-effective alternatives, diesel from Russia accounted for 44% of Europe’s total imports of the road fuel so far in November, compared with 39% in October, Refinitiv data shows.

Although Europe’s dependence on Russian fuel fell from more than 50% before Moscow’s February invasion of Ukraine, Russia is still the continent’s largest diesel supplier.

“The EU will need 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, mainly the Middle East and India,” Eugene Lindell, refining and products market analyst at FGE, said.

The Russian gasoline going into ARA tanks is likely to be used or sold quickly because of deterioration in Ice-gas oil futures, where the current value is higher than it will be in later months, Lars van Wageningen, at the Dutch consulting company Insights Global, said .

Part of the influx comes as ICE Futures Europe bans low sulfur gasoline of Russian origin ahead of EU sanctions.

From November 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 by the ICE futures contract.

Russian gasoline 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 gasoline, as well as declining delivered volumes.

“Volumes delivered at expiration are actually quite small … it just adds an extra layer of logistical challenge,” said Neil Crosby, senior analyst at oil analysis firm OilX.

In January 2022, 70,000 tons of gasoline were delivered by the Ice gasoil futures exchange’s website shows.

Reporting by Rowena Edwards and Ron Bousso in London; Editing by Alexander Smith

Our Standards: The Thomson Reuters Trust Principles.


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