- Exports from Russia's Primorsk port have hit the highest levels since at least 2016.
- The amount of diesel stored in Russia's fuel-pipeline network has decreased by 154k tons since February 14.
- If Russia is having trouble finding buyers, it could have a significant impact on the global diesel fuel market.
Dear Reader,
Even in the face of sanctions, Russia is pushing more diesel fuel into the market, but it's not clear if they are having trouble finding buyers.
To understand this situation, think of it like a store owner stocking shelves with products. The store owner is Russia and the product is diesel fuel. The store owner is stocking the shelves, but it is not clear if they are having trouble selling the product.
The evidence suggests that Russia is continuing to export diesel fuel, even if it is taking longer for the fuel to find buyers. For example, there is 3.2 million barrels of Russian diesel fuel idling offshore, and exports from Russia's Primorsk port have hit the highest levels since at least 2016. At the same time, the amount of diesel stored in Russia's fuel-pipeline network has decreased by 154k tons since February 14.
If Russia is having trouble finding buyers, it could have a significant impact on the global diesel fuel market. It's essential that we keep an eye on the situation and continue to monitor the data to determine if Russia is struggling to find buyers for its fuel.
Russia is facing a difficult challenge when it comes to storing its crude oil. Many of the markets they usually turn to are becoming “saturated” and unable to take on anymore. As a result, they have looked to Turkey and Ghana as potential storage locations.
That marks the first time in 5 years Russian oil has been delivered to a West African country.
This has caused some issues in Ghana, as the tanker carrying the crude is currently waiting for “approval” from the government. Although it is likely to be approved, the Western sanctions against Russia have caused some concern for smaller nations like Ghana. This is because Ghana is relying on the World Bank to help with its balance sheet, and taking in Russian crude could potentially cause “problems” with receiving those funds.
Russia's Balancing Act
To make matters worse, Russia is also trying to balance storage between products and crude, which is proving to be a challenging task due to their reliance on exports. This is causing further reductions in crude production and operations at refineries, making it harder for Russia to operate as normal.
All of this could have a major effect on the global economy, so it is important for Russia to find willing partners for crude storage, if they are not reliant on Western funds.
The global economy is facing a unique challenge with the influx of Russian product. As supply chains pivot to accommodate, Russian product is being shipped to Asia and Latin America, with Brazil alone taking in 820k barrels of diesel.
This shift is likely to accelerate in the coming months, creating more competition in the market and leading to increased storage. Refiners coming back online will be key to watch as Russia puts more product into the market, particularly in the middle distillate, heavy distillate, and residual fuel segments.
Gasoline and light distillates are already at record highs, and the pressure is on the middle distillate crack to maintain operational margin. In other words, the market may struggle to absorb all the extra Russian product, resulting in lower prices and more stored fuel.
Some of the product could be temporarily classified as floating storage because weather conditions may be causing some difficulties in unloading.
But, also fears of a shortage prompted European refiners to boost production to prepare for a winter that ended up being warmer than normal.
What This Could Mean For Oil Prices
Russia is weighing its options in response to western sanctions that created this mess in the first place. Putin’s aim is to spike prices for western customers by cutting oil production.
The Russian leader has slammed the sanctions as "stupid," and has vowed to cut exports by 25% in a bid to push up prices.
Meanwhile, China is happy to buy up Russian oil at steep discounts.
How long this arrangement could go on as Russia needs more and more revenue to fund its war effort is the question.
And it also begs the question if the cozy Russia – China alliance will result in a new reserve currency between the two nations that could rival the U.S. dollar. We will monitor that situation closely.
Kind regards,
Freedom Financial News
