[Cyprus Times] Russian oil: How Europe will wean itself off crude

Diesel runs dry in Europe Desperately seeking suppliers How Europe will wean itself off crude

Next week, the G7 and EU countries are expected to set a cap on Russian oil, with the markets' reaction still unknown. Russia has already stated that it will stop supplying oil and gas to countries that support a cap.

However, Europe has two major problems. The first is that there are ten weeks left to block transactions in this sector. The second and biggest is that a new supplier will have to be found for the Old Continent.

The level of dependence

According to Bloomberg, the EU and Britain received half of all diesel imports in the first 24 days of this month. Europe's dependency level shot up sharply from October, when the continent's total imports rose to cope with strikes that knocked out French oil refining capacity.

Overall, tankers delivered an average of 1.34 million barrels of diesel per day during the Nov. 1-24 period in the EU and the U.K., according to Vortexa data. This is significantly lower than in October, but still higher than the average for the first 10 months of 2022.

The deadline for diesel imports

Diesel by 5 February will be banned entirely in Europe. Understandably, buyers will face a crisis unless they take more barrels to make up the shortfall.

The EU and the UK received about 600,000 barrels of diesel a day in shipments from Russia in the 1-24 November period, 45% of total arrivals. In October they received 34% from Russia, while the average for the first 10 months of the year was 51%.

Exports from the Baltic Sea port of Primorsk showed a dramatic rebound last month and are expected to increase even more next month. A notable share of the total Russian product arriving in Europe by sea is channelled to the Amsterdam-Rotterdam-Ambersa region, the oil trading hub of north-western Europe.

The incentive to sell the barrels

December is the last month that traders on ICE Gasoil - the main market for diesel futures contracts in Europe - will be able to deliver Russian natural fuel to storage sites in the ARA region through these contracts.

This potentially creates an incentive for anyone who wants to sell Russian barrels through these futures contracts to do so. As early as January, delivery of product of Russian origin will be banned. Other importers of diesel cargoes from Russia include France, Germany and Poland.

On the hunt for suppliers in Europe

At the same time, Europe is under pressure to find alternative sources of supply, Russia also needs to find new destinations for its exports: in September, more than half of its quantities were directed to the EU.

Turkey is also a major buyer, along with Morocco and Tunisia. Russia also exports large volumes of other oil products. Naphtha is a petroleum product that can be used either for gasoline production or as a feedstock in the petrochemical industry. Fuel oil, essentially a residue of the crude refining process, has multiple potential uses, including for electricity generation and as a fuel for ships.

Russia's total shipments of petroleum products this month are set to reach the highest level in terms of barrels per day since February, when the invasion of Ukraine began.[BRP]Russian fuel is certainly not all exported from the country's ports - some may be shipped via third countries and are not included in the statistics reported earlier.

Source: in.gr

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