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European countries imported diesel fuel in unprecedented amounts in December as buyers rushed to secure supplies ahead of EU sanctions on Russian oil products.
Diesel imports in the European region rose to a record 8.2 million tonnes in December, according to an analysis by market data firm Refinitiv shared with POLITICO.
Before the war in Ukraine, Russia typically supplied more than half of EU imports and about 10 percent of total demand for diesel – a vital fuel for road vehicles, trains and shipping, as well as industrial and agricultural machinery. Of. Imports of all Russian petroleum products, including diesel, will be banned by the European Union from February 5 in one of the toughest sanctions ever against Moscow, aimed at undermining fossil revenues that Vladimir Putin uses to fund his war against Ukraine. Let’s do it for financing.
The ban had sparked fears of diesel supply shortages in the EU at the end of winter, at a time when consumers are already suffering from high inflation and industry is feeling the burden of sky-high energy prices. But the recent glut of imports, say market analysts, would mean that the diesel ban would not be a problem immediately.
“There won’t be a crisis in the immediate future,” said Raj Rajendran, a principal analyst at Refinitiv, part of the London Stock Exchange Group. “Europe has bought diesel heavily to build up inventory as a safety net that is providing some assurance to survive this winter. The current warm weather is also reducing demand for oil.
Refinitiv’s analysis includes both Turkey and the UK in the European region, although the UK stopped importing Russian diesel a few months ago.
Record imports in December included significant, last-minute EU purchases of Russian diesel, according to analysis by Refinitiv, which continued into January. European countries and Turkey imported 3.51 million tonnes of diesel from Russia in December.
Germany was the EU’s biggest importer of Russian diesel, bringing in 604,000 tonnes in December, the most since May 2020. Imports have increased from alternative suppliers in the Middle East as well as from India and China, where COVID has resulted in less economic activity. That hammered domestic demand and forced Beijing to allow refiners to export more diesel.
Kuwait and Saudi Arabia have emerged as major alternative exporters, likely to replace at least some of Russian diesel supplies after the sanctions are implemented, said Claudio Galimberti from energy research firm Rystad.
“Europe’s shortfall will be around half a million barrels of diesel,” Galimberti said, adding that the EU lacks the refining capacity to fill the gap. Therefore, Europe has to depend on Russian imports from alternative sources. However, fears of a real diesel shortage are fading away. “We’re not in a situation where we’re going to have areas of Europe dry,” Galimberti said. “But the price of diesel could be even higher in the last one year.”
Rajendran agreed. “The concern may come in the spring, in the second trimester. If [diesel] The inventory has come down significantly, there will be huge pressure on the prices.
Raluca Marian, director of EU advocacy at road transport lobby IRU, which represents more than 170 companies, said prices were “stable” at the moment. “We cannot exclude problems, but this would not be a general shortfall,” she said.
Josh Posner contributed reporting.