The European Union and Britain have been importing vast quantities of Russian diesel oil in December, seeking to squirrel away as much as possible before a ban on imports snaps into place in February.
According to an analysis of sea-based energy cargo tracking data by US business media, the EU and the UK imported some 16 million barrels-worth of diesel fuel between December 1 and 10, with imports on track to approaching records set in early 2016.
Russia accounted for nearly half of the total imports, sending an average of 749,300 barrels per day (bpd) of the 1.6 million bpd total. Saudi Arabia, India, the United States and the UAE rounded out the top five, sending 298,300, 156,400, 60,800, and 28,000 bpd, respectively.
Global energy markets are bracing for another price shock early next year, with an EU ban on Russian oil products, including diesel, set to go into effect on February 5, 2023. The restrictions, meant to ‘punish’ Russia for its ongoing military operation in Ukraine, are one of a series of ‘punishments’ doled out to date, which have so far largely boomeranged around and hit the West, sparking or accelerating energy and inflation crises across Europe and North America, and threatening to plunge the world into a severe recession in 2023.
Russia has moved to reorient energy it once sold to the West to markets in the Global South, particularly China and India. Moscow has offered these countries deep discounts on crude, but amid higher global prices has managed to come out in the green, with Russia projected to earn $337.5 billion on energy exports in 2022, 38 percent more than it did in 2021.
However, December’s diesel export data shows that Russian diesel shipments to Europe have also been growing steadily since September, hitting their highest levels since March, when sales reached an average of 766,100 bpd. The export data shows that the EU 27 plus the UK continue to account for more than half of Russia’s total ship-based diesel exports, accounting for 694,300 bpd among the 1.2 million bpd export average in November.
Oil prices surged last week on news that the G7 had agreed to cap Russian crude purchases at $60 a barrel. President Putin assured last week that the price cap “does not affect us in any way,” and that Russia “will not suffer losses – no matter what.”
On Tuesday, Russian media reported on a draft Russian government decree that would effectively ban oil exports to countries seeking to buy Russian oil using the ‘price cap’ mechanism. The decree is said to be in the stage of being finalized by the president’s administration. The Kremlin indicated Monday that the text of the decree would be published “in the coming days.”