The embargo will change the EU’s diesel route: Turkey also plays an important role – Last Minute Economy News
Diesel is one of the most important fuels for the global economy, used in trucks, buses, ships and trains, and the most important fuel in construction, manufacturing and agricultural machinery. The series experienced in natural gas prices compared to previous years results in the use of diesel in electricity operation in some places. While the bottlenecks in the global markets continue in 2023, analysts are of the opinion that a new diesel bottleneck may be experienced in other countries with the European Union’s embargo on oil and energy products from Russia. This could lead to new price increases in oil markets and pump prices, and redraw global diesel cyclical routes. Some analyzes indicate that Turkey may also increase its diesel exports to the EU.
European Union (EU) cultures are preparing to impose an embargo not only on Russia’s oil, but also on its refined fuels, as a result of February conditions.
DIESEL BOTTLEZE AFTER NATURAL GAS
According to the news of Ekonomim.com, the expert is of the opinion that these embargoes may cause the union, which experienced a natural gas bottleneck in 2022, to experience a diesel bottleneck in 2023. Bernstein analysts, in a customer note, are of the opinion that “the functioning of the diesel markets will tighten” with the implementation of the EU’s embargo on Russian petroleum products on February 5th. Flex LNG CEO Oeystein Kalleklev will say on Twitter yesterday, “2022 was the year of the gas bottleneck in Europe. Will 2023 be the year of the diesel bottleneck?” draws attention to these concerns.
The EU is the economic region with the highest diesel exhaust load in the world. About 500 million barrels of diesel ship to the EU each year, and Vortexa Ltd. According to expectations, normally half of this diesel is loaded from Russian ports. The EU imported 220 million barrels of diesel products from Russia in 2022. According to the news in Gulf News, the Union will have to see 600,000 barrels/day of diesel imports other than Russia, and Russia will have to find new buyers for its diesel.
Although new routes are charted, consulting firm Energy Aspects believes that Russia’s diesel exports will only reach a third, while the remaining volume will not reach the global market.
RUSSIA IS THE EU’S LARGEST DIESEL SUPPLIER DESPITE THE WAR
The ceiling price application for refined petroleum products such as diesel to be imported from Russia begins at the end of February 5. According to Markets.com, in 2022, despite the Ukraine War, Russia continued to be the largest diesel equipment of the EU and the UK. Other biggest diesel plants of Saudi Arabia, India, USA, United Arab Emirates union and UK.
MAINTENANCE AT US REFINERY WILL ALSO TIGHTEN THE DIESEL MARKET
European global diesel systems are a supply-side concern. Also, in parallel with Russian petroleum products embargoes, maintenance plans for many refineries in the US will continue until the end of May. At least 15 US refineries will suspend production for maintenance for two to 11 weeks until the end of May, according to data from Reuters and refinery intelligence company IIR Energy. By the end of mid-February, the total capacity of US refineries will be impacted by twice the averages of the last five years, with total production decreasing by about 1.4 million barrels. Production for maintenance will not be interrupted in some refineries in Europe. In addition, the fuel production of the two oil refineries on the way to Germany, which previously received Russian oil through the pipeline, will also decrease. In France, a strike by refinery cells, as well as seasonal maintenance cloth, is seen as a concern for the continent’s diesel supply.
TURKEY CAN ALSO PLAY A SIGNIFICANT ROLE
According to an analysis in Bloomberg, the union will focus on increasing its purchases from the Middle East due to its location. Turkey is also seen as one of the potential vehicle broads in the analysis, and the analysis states that “Turkey, which is not part of the EU, can import large volumes of diesel from Russia – it already imports diesel – and uses it in the domestic market. The diesel it produces in its own refineries can probably be sold to the EU at even higher prices”. US energy company Exxon this month began distribution for the expansion of its Beaumont refinery, Texas, with a $2 billion investment. Iraq’s Karbala oil refinery is starting production just like March. Kuwait’s az-Zour refinery is also expected to conclude in the second quarter with a processing capacity of 615,000 barrels per day. Germany recently entered into a supply agreement with the national oil company of the United Arab Emirates.
CHINA’S DIESEL EXPORTS INCREASING RAPIDLY, MAY BRING THE GAP
It is stated that in parallel with the developments, China’s diesel exports have been at record-breaking rates in recent months. Wood Mackenzie Ltd. “China’s policy is critical and there is refinery overcapacity,” says Mark Williams, director of research. According to Williams, China, which has also increased its export fuel quotas, can export 400 thousand to 600 thousand barrels of diesel fuel in the first half of the year. But China does not supply directly to the EU, but to another place in Asia. However, this is diesel performance that will go to the EU by relieving the global diesel supply.
INDIA REFINES RUSSIAN OIL AND SENDS DIESEL TO EU
It is stated that the EU, which is trying to become independent from Russian fuels, is increasing its diesel imports from India. The production of diesel imports from Saudi Arabia is also transferred. According to the news in Gulf News, India is increasing its diesel shipments to the union by refining the buyer Russian oil, due to the sanctions imposed on Russia’s crude oil. Keshav Lohiya, founder of consulting firm Oilytics, tells Gulf News that his sanctions will create a huge logistical challenge, but markets have kept the lengths from panic as the routes re-expansion.