Russia’s diesel exports set to fall to near zero in October
Russia is appearing to make good on its diesel export ban in October, with loadings from Russian ports on the Black and Baltic Sea set to drop to near nothing for next month.
Russia’s loading schedule for October includes 223,000 thousand tons—222,800 thousand tons of which are set to be loaded in Primorsk and Novorossiysk for customers in the Eurasian Economic Union, which are exempt from the ban.
Russia announced in September a ban on most diesel exports from its western ports in an effort to stabilize fuel prices at home, but later lifted the ban on low-quality diesel. Russia is eagerly pursuing measures that would stave off a repeat of the 2018 fuel crisis. In November 2018, Russian President Vladimir Putin saw his approval ratings drop to a low not seen in six years, mainly due to higher prices at the pump, which saw a 7% increase since May. The government’s response was to have oil companies and independent fuel refiners hold wholesale prices at June 2018 levels until the end of the year. Russia then agreed to allow fuel prices to increase in line—but only in line—with inflation.
The move was largely seen as a political, populist, and short-term stop-gap measure.
With the war in Ukraine, Putin is unlikely to tolerate fuel shortages that could influence the approval of the populace.
Russia’s export ban that looks like it will take full effect in October could exacerbate an already tight global diesel market, driving crude and middle distillate prices ever higher ahead of winter. Crude oil prices are already rising, with Brent still trading over $95.
Europe’s diesel prices rose after the ban was announced, reaching as high as $1008 per metric ton. The ban is expected to be temporary, with Russia’s diesel storage tanks eventually set to reach full capacity.
