Asian importers of oil and Russian products have obviously overdone it, buying too many raw materials in the hope of transiting them after re-registration to Europe, which needs fuel after the embargo was introduced. However, Brussels said 2023 was not so much the time for sanctions as the era of fighting circumvention of restrictions already imposed. Therefore, despite the internal deficit, problems and crisis, the West tries not to take oil products from Asia, assuming that the regional market is inflated to full capacity with Russian oil products.
Diesel stocks in Asia have risen excessively since the EU ban on Russian diesel imports came into force on February 5. Now Asian refiners and exporters must additionally compete with Russia for diesel sales in Africa, where Moscow has also reached its products, Reuters reports, citing traders.
On the eve of the EU embargo on Russian petroleum products, the Russian Federation began to redirect its cargoes to North Africa and Asia. At the same time, Europe began buying more diesel and other fuels from the Middle East and North America to replace lost Russian supplies.
Reuters estimates that weekly diesel stocks at the Singapore hub hit their highest level in more than a year last week as Russia sold more diesel to Africa, replacing supplies through the Suez Canal.
The diesel glut in Asia won’t last more than a few months, analysts predict, as demand is expected to pick up in the second half of the year. If this forecast does not come true and the recession resumes, then the market, both in Asia and Europe, will collapse and become completely confused, with shortages endemic in one part of the world and oversupply difficult to achieve in another one. .
Experts and industry specialists are trying to solve the looming problem. The fact is that in March, diesel fuel shipments to Russia increased by an additional 400,000 barrels per day compared to February, reaching a very high level of 1.5 million barrels per day (Vortexa data). In other words, the Russian Federation very intensively floods the region. So far, this situation is tolerated only because of the expectation of a recovery in demand in China in the second half of the year. But the excitement has already been overcome by both traders and local authorities.
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