The European Union began banning Russian oil products as of February 5, after it banned the import of Russian seaborne crude oil as of December 5, as part of the sanctions imposed on Moscow in response to the Ukrainian war.
In addition to the ban, the European Union countries agreed to set a price ceiling for Russian refined oil products, with this ceiling being $100 per barrel of Russian diesel.
Russia is considered an important player in the diesel export market. Last year, it exported about 850,000 barrels per day of diesel, three-quarters of this quantity, or about 650,000 barrels per day, used to go to Europe.
Currently, after the European embargo, Moscow will have to find alternative markets for these quantities.
According to Wood Mackenzie, it seems that Moscow’s task will not be difficult, as McKinsey believes that the African continent will be at the forefront of alternative markets.
It is expected that Russian diesel exports to Africa will more than triple this year, to reach about 250,000 barrels per day.
At the same time, shipments of Russian diesel destined for the eastern Mediterranean region, specifically to Turkey, are expected to increase by about 90 percent, to 210,000 barrels per day.
Latin America will also appear on the compass of Russian supplies, to which Moscow did not export any quantities of diesel, but during this year it will export about 100,000 barrels per day, according to the same estimates.
In light of this change in paths, Wood Mackenzie estimates that Russia will lose about 200,000 barrels per day of export capabilities, compared to the numbers recorded last year.
Russian diesel sales decline
For his part, Ole Hansen, head of commodity strategy at Saxo Bank, said during this week’s episode of “Energy World” on “Sky News Arabia” that Russia will look for alternative destinations for diesel, and these markets may be far away and take a longer time to reach.
Hansen added that Russia must accept a reduction in the prices of its diesel exports in order to open new markets, “and accordingly we expect a decline in Russian diesel sales, although this decrease will not be significant.”
“The competitiveness of Russian diesel will be great in new markets such as Africa or Turkey and Latin America, and therefore Russia will have to offer some kind of discount on selling prices of between 20 and 25 percent compared to international prices,” says Saxo Bank’s head of commodity strategy.
Hansen said that this period is witnessing a lot of speculation about Russia’s ability to continue selling oil, gas and diesel, and also questions about the markets that import, in light of the sanctions imposed on them, and the maximum prices.
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