Diesel Cracks Supported Around 20$/bbl: FGE

Diesel cracks are supported around 20$/bbl with higher freight cost for Europe according to FGE.

• “Global cracks tend to be set in NW Europe and higher freight costs to import middle distillate into Europe will be passed on in the form of higher cracks”
• They expect the changing trade flows to drive clean freight rates to a record this year.
• Russian diesel supply could be impacted if global prices fall. “The higher the flat price the easier it is to inefficiently — i.e. expensively — move Russian hydrocarbons around the world to regions that do not necessarily need them. But in a sleeker low flat price environment, the ability of Russia to act is significantly curtailed”
• The loss of Russian naphtha could reduce gasoline exports from Europe with a negative impact on blending in the ARA region. Unlike diesel supplies, Russian exports of the naphtha to the EU have already declined in January according to FGE.