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Russian Diesel Is Europe’s New Embargo Target

There are signs that this shift is already underway, with countries like France and Germany reducing their purchases of Russian diesel, Mr. Grati said. “Those countries are preparing for the divorce,” he added.

This rebalancing, which is only just beginning, will almost certainly cause strains that force prices higher, analysts say. For one thing, longer distances for shipping diesel will mean that larger vessels will be needed to bring products to Europe, and longer shipping times will add to costs.

There could also be a mismatch of fuels. Russian refiners may try to sell diesel made for Europe to places where a higher concentration of pollutants is permitted, like West Africa, analysts say, while European energy companies will need to look harder for sufficient high-specification fuels that local regulations require.

Diesel supplies may be squeezed in other ways. With China’s economy likely to begin heating up thanks to the easing of Covid-19 restrictions, refineries there and elsewhere in Asia may shift to making jet fuel at the expense of diesel, reducing the amount of diesel available to send to Europe.

The hindrances on Russia may mean it is not able sell all its output. That could mean less diesel fuel in the global market, further crimping supplies that have been tight for months.

“Prices of all products will have to push higher,” said Richard Bronze, head of geopolitics at Energy Aspects, a research firm. “Europe is going to feel that particularly strongly.”

Already, overall Russian diesel exports have dropped sharply in recent days, said Viktor Katona, an analyst at Kpler, a firm that tracks energy shipping. Mr. Katona also said ships laden with diesel had headed from Russia to Morocco in recent weeks. Their cargo, he said, could be reexported to Spain or other Mediterranean destinations.

Sumber: www.nytimes.com