Potential Russian Oil Product Duty Has Impact for Europe

Comments from Gazprom NEFTS CEO Alexander Dyukov on high protective duties potentially being applied to Russian oil products. These have been reported in the region of $250/ton.

• “The consequences of this would be a decrease in the efficiency of refineries and, accordingly, a decline in refining volumes. If not calculated accurately enough, these measures could cause a shortage in motor fuel on the domestic market. It is important not to unbalance refining," Dyukov said.
• "This idea has the right to exist. However, it requires a thorough analysis in order to render a final decision." he added.
• Russian traders and exporters have been incentivised to buy fuel on the Russian domestic market and sell onto the export market for a profit which has tightened supplies and led to record domestic prices.
• Russian exports are already slipping as pressure mounts on exporters. Daily Russian diesel cargo loadings fell to 135,200 t/d between 1-11 September, from 139,300 t/d last month and 148,200 t/d in July, according to Vortexa.
• This has an impact on Europe. Brazil and Turkey have been pulling in large volumes of Russian diesel this year which is directly and indirectly having a knock-on impact for flows to Europe.
• Turkey has been exporting diesel directly to Europe while Brazil has imported less from the US, allowing those flows to head across the Atlantic to Europe instead.
• Due to this shuffle, Europe appears to be leaning on east of Suez diesel markets like Saudi instead to fill the gap.