Europe is increasingly worried, because of the fear that it will run out of diesel following the invasion of Europe Russia Ukraine, no wonder, given that the continent traditionally imports regarding 20% of its needs from Moscow.
European oil companies are avoiding Russian supplies as the fighting enters its second month. Instead; It seeks to secure shipments from faraway regions such as: the Middle East, Asia, and the United States.
It also limits major oil companies, including: “Shell”, “and”British Petroleum“, And”Total energyof fuel shipments already in Germany.
Because they are wary of what will happen in the foreseeable future; Traders pay big bonuses to grab the supplies that are there now rather than waiting.
Some companies, including the Trafigura group, have warned that some sites may run out of flow.
This echoes dire predictions from some politicians in Moscow that Europe may face severe shortages. So much so that there is some talk of a possible outright ban on buying.
To see how severe the problem really is, and how quickly we run out of stock; take a look
Here are some of the numbers behind it.
Frequency of stock out
There were 247.4 million barrels of intermediate distillates – the class of fuel in which diesel is by far the largest component – stored in European countries at the end of January, according to the International Energy Agency.
This is enough to meet approximately 40 days of demand, even if the continent does not produce or import a single additional barrel of fuel.
European countries will continue to produce and import diesel from other traditional destinations of the continent apart from Russia. How quickly a particular region or country runs out of stock will depend on its success in replacing stocks that currently come from Russia.
uneven distribution
however; These stocks are not evenly distributed, and pressures will appear more closely in some areas than in others. While Finland and Denmark have sufficient stocks in private and government-controlled stocks, allowing them to continue operating in the industrial sector for more than 6 months; However, UK and Norway stocks are not enough for more than 30 days.
Before the pandemic, the UK relied on imports to meet nearly half of its demand for intermediate distillates, and a third of that supply came from Russia, according to Eurostat data.
If the state wants to avoid depleting stocks, it will have to find alternative sources that provide it with approximately 100,000 barrels of diesel per day, in addition to a medium-sized tanker that swims in the ocean weekly.
But the UK may be doing relatively better in other ways, as the country has traditionally relied on a variety of suppliers for its imports, be it crude oil or diesel.
Ties with Moscow
Countries, or even regions within countries, that have traditionally relied on suppliers other than Russia—whether it be crude oil, distillates, or diesel fuel—would be in a much better position than those with close ties to Moscow.
The most prominent example is Germany, the largest diesel consumer in Europe. The southern part of the country is connected to the Mediterranean via oil pipelines from Marseille in France and Trieste in Italy, and supplies supplies to refineries in Karlsruhe, Fauburg near Ingolstadt, and Burghausen . as a result; It is increasingly dependent on Russian flows.
By the same token, the western part of the country is connected to the ports in Rotterdam and Wilhelmshaven, which insures it from the effect of any international or “self” sanctions imposed on Moscow over the past few weeks. however; Reliance on Russian diesel puts him in a weak position.
On the contrary, the eastern part of the country, where refineries often process Russian crude, will face the greatest pressure if the flow of this oil stops.
dwindling resources
Germany’s emergency stocks are distributed across the territory of the Federal Republic in such a way as to allow at least 15 days of immediately accessible flows in each of the five designated supply zones, according to the German Association of Petroleum Stocks (EBV).
In its latest annual report, the association said that the five regions “mainly correspond to the logistical environment of the refineries.”
These stocks may be dwindling much faster in eastern Germany than in the south, and the region’s ability to adapt will depend to a large extent on how easily the country’s stocks can be moved throughout the scourge.
The same applies to other regions of the continent; Heavy reliance on Russian crude will make refineries in the Czech Republic, Poland, Slovakia, and Hungary relatively vulnerable to any supply disruptions or procurement restrictions. This may cause a rapid chain reaction on diesel flows.
fatal blow
There are already supply disruptions at wholesalers in some parts of Germany. And more of them will follow if the products cannot be transported to the places where they are needed. The movement of these products will depend, as far as possible, on trucks, trains and barges.
Prices can also play a big role long before a shortage of raw materials occurs, rising to levels that destroy demand.
But any noticeable shortage of fuel at filling stations would be a severe blow not only to drivers; But it will also destroy economically several sectors, such as: logistics, construction, and agriculture, which depend heavily on diesel.
Source: Bloomberg
