Russia seeks new fuel markets in Africa and the Middle East as Europe moves away

A mannequin of a petroleum pump in entrance of the colours of the European Union and Russia flags on this illustration taken on March 25, 2022. REUTERS/Dado Rovich/Illustration/file picture

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MOSCOW (Reuters) – Russia is growing gasoline and naphtha provides to Africa and the Center East because it struggles to promote gasoline in Europe, whereas Asia is already receiving extra Russian crude, information from Refinitiv Eikon and sources confirmed.

This improvement is more likely to improve competitors with Asian clients between Russia and different main gasoline exporters – Saudi Arabia and the USA – the three largest suppliers to Asia.

The European Union has slowly decreased its imports of Russian crude and gasoline since March, agreeing to a full ban that may take impact by the top of 2022. Learn extra

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Asian consumers stepped in to rapidly improve their purchases of Russian crude, though Asia just isn’t a pure marketplace for Russian gasoline as a result of Asia refines extra oil than it wants and is a web exporter of the gasoline.

This makes discovering new niches reminiscent of Africa and the Center East vital for Russia to guard its world market share and keep away from a deeper decline in oil exports and manufacturing.

“Africa and the Center East appear to be the principle choices for suppliers of Russian oil merchandise, so we count on extra shipments there within the second half of the 12 months because the EU embargo approaches,” a dealer concerned within the Russian oil merchandise commerce instructed Reuters.

Russia exported greater than 2.5 million barrels per day of crude and about 2 million barrels per day of gasoline to Europe earlier than sanctions had been imposed on the Russian monetary sector, which made buying and selling tougher.

Merchants mentioned that Russian oil firms have just lately elevated their provides of gasoline and naphtha to Africa and the Center East from the Baltic states. Earlier than the sanctions, many of the Russian provides to the areas got here from the Black Sea ports.

Not less than 5 shipments carrying about 230,000 tons of gasoline and naphtha had been delivered from Could to June from the Baltic Sea port of Ust Luga to Oman and to the UAE oil hub in Fujairah, in keeping with Refinitiv information.

The info confirmed that the full provides of naphtha and gasoline from Russian ports to the Sultanate of Oman and the UAE amounted to just about 550,000 tons this 12 months, in comparison with zero in the entire of 2021.

Knowledge from Refinitiv Icon and Merchants confirmed that Nigeria and Morocco have been main locations in Africa for Russian gasoline and naphtha in latest months, whereas a number of shipments have been made to Senegal, Sudan, Ivory Coast and Togo.

Refinitiv Eikon information confirmed that the full month-to-month provides of Russian gasoline and naphtha to the area amounted to about 200,000 tons in latest months, together with hundreds shipped from storage on the ports of Latvia and Estonia.

Refinitiv information and Reuters calculations confirmed that Russian diesel shipments to African nations reached a million tons for the reason that starting of the 12 months, up from 0.8 million tons in January and June 2021, with Senegal and Togo as the principle locations.

In Could, imports of Russian gasoline oil into Fujairah, the UAE’s oil hub, jumped sharply. Learn extra

Merchants mentioned that regardless of rising freight prices, supplying Africa and the Center East with Russian oil merchandise helps buying and selling firms keep revenue margins as choices for reselling oil merchandise in Europe are restricted on account of sanctions.

“Sohar (in Oman) and Fujairah (within the UAE) can present storage and mixing capabilities for all these barrels, whereas European ports have began rejecting Russian oil merchandise,” mentioned a market supply concerned within the Russian oil merchandise commerce.

Evaluation of the native market

The change within the Russian export markets has led to an unprecedented disparity within the Russian home market. Summer time diesel is at the moment buying and selling at 30-40% greater costs than gasoline, primarily based on Reuters information. Gasoline is normally dearer than diesel.

Merchants mentioned that Russia had beforehand exported gasoline and naphtha to European buying and selling hubs, however was pressured to go to Africa and the Center East amid weak demand in Europe.

Consequently, home costs for these merchandise collapsed in Russia on account of an oversupply.

Russian gasoline traded at $250-300 per ton decrease than the non-sanctioned European product, which was just lately valued at round $1,330 per ton on FOB foundation.

Merchants mentioned the discount in diesel shipments was a lot much less – about $40-50 per tonne lower than the non-sanctioned European product – as a result of there was nonetheless sturdy demand.

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Reported by Reuters. Enhancing by Jane Merriman

Our standards: Thomson Reuters Belief Rules.