Market Complacent About Russian Threat: RBC

Russia’s move to ban diesel and gasoline exports may “reduce some of the complacency that had crept into the market about a Russian disruption threat,” according to RBC analysts.

• They added that it is unwelcome news for the Biden administration in its inflationary battle.
• The restriction will likely further exacerbate shortages in a global product market, with Turkey, Africa, and Brazil seen impacted the most RBC said.
• “We see the majority of Russia’s +1 mb/d diesel exports being subject to the export ban, though we expect exemptions to blunt the impact to some degree.” RBC said.
• “Of the 1.3 mb/d of Russian product export flows, we could see a disruption of up to 950 kb/d to 1.1 mb/d for the duration of the ban.” RBC added.
• Other banks had said storage issues would serve to keep the ban duration short but RBC said that is unclear at this stage if that factor is a binding constraint.