Europe is scrambling to buy diesel fuel from Russia before a ban on imports comes into force in early February, but the frantic stockpiling is unlikely to prevent a new price shock for truckers, drivers and businesses.
In the first two weeks of January, European countries snapped up almost 8 million barrels of Russian diesel, according to energy data provider Vortexa, roughly on par with imports this time last year before Russia invaded Ukraine. Imports in the fourth quarter of 2022 were up nearly 19% on the same period the previous year.
Russia is the bloc’s biggest supplier, making up 29% of its total diesel imports last year, data from Rystad Energy shows.
Since Russia’s invasion in February last year, the European Union has made a huge effort to wean itself off Moscow’s oil and natural gas supplies.
EU countries drastically reduced their imports of crude from Russia ahead of the ban, but that isn’t happening with diesel because it’s much harder to find alternative sources of the fuel.
The EU ban will tighten the global market for diesel, according to Mark Williams, a research director at Wood Mackenzie, told CNN — unless Russia can successfully divert its cargoes to Latin America and Africa, regions which typically import from the United States. That would free up US barrels to be sent to Europe, plugging the gap left by Moscow, he said.
But importing diesel from suppliers further afield, including the United States and Saudi Arabia, will push up freight costs, feeding into higher consumer prices, he said.
“We are expecting diesel prices to rise in Europe. We’re expecting a spike sort of February, March time,” Williams said.
According to Wood Mackenzie’s estimates, the price of a barrel of diesel will average $40 for the first three months of this year. That’s up a whopping 470% from the average price for the whole of 2021, before Russia’s invasion sent prices soaring.
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