Russian fuel embargo: What it means for international prices and how much it affects heating oil


The EU’s third embargo against Russia was activated on Sunday – The cap deal with the G7

By Chrysostomos Tsoufis

Attempting another blow to Russia’s income and the financing of its war machine, the EU imposed another, third embargo from yesterday Sunday, this time on Russian oil refining products such as diesel, kerosene and heating oil. There were previous bans on Russian oil reaching the Old Continent by sea and also through the Druzhba pipeline.

And as it happened with oil, in this case too, ceilings were decided in cooperation with the G7 on the selling price of these products to third countries. $100 for diesel and $45 for lower quality fuels such as heating oil, relatively high prices as the allies’ goal is not to stop Russian quantities but to control them.

Knowing that the time of the embargo, which has been announced here for some months, is coming, the Europeans tried to achieve 2 goals at the same time. And to fill their warehouses and reduce their dependence on Russia , just like they did with natural gas. And things imported very large amounts, about 600,000 barrels in December and 450,000 in January, reducing Russia’s share to 27% from 50% before its invasion of Ukraine. Even so, the quantities that they have to replace by securing new suppliers are large. Analysts say Europe will make it. USA, India, Middle Eastern countries like Egypt or even China have already increased their exports to Europe and will probably increase them even more.

It is reasonable, however, that there will be a short period of time required until Europe fully replaces Russian quantities and according to analysts, at least in the short term, there are expected to be some disruptions in supply, even shortages, problems that always cause price increases when they appear.

Things will be even more difficult for the Russians. The oil embargo it costs them according to the announcements of the Commission €160 million per day despite the fact that they immediately found buyers since especially China and India immediately and significantly increased their purchases. With refined products, however, things are different because these 2 Asian giants are big exporters. Turkey, Latin America and Africa already buying larger quantities are not enough to cover the Russian unavailability.

As fate would have it, the Russians will attempt, as they did with oil, to circumvent the sanctions by creating a ghost fleet. Through this they will sell in countries such as Turkey or Morocco which will then resell in Europe.

The first information already speaks of a fleet of 200 tankers of petroleum products, about 7% of the total market that have passed through this part of transport. Of course, as the experts argue, these ships have been made for short journeys – Russia is only 3.4 days away from the ports of North-West Europe – and now they will have to make much longer journeys, increasing both the strain on the ships and the costs.

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