Bloomberg Agency said that a large part of the diesel market, which is the backbone of the global economy, is on a date with severe penalties during the next few weeks.
The agency stated that the European Union, the Group of Seven and their allies intend, starting from February 5, to set a ceiling on the prices of Russian fuel exports, in the latest punishment in response to the invasion of Ukraine.
Although shipments of Russian crude are subject to sanctions, sanctions on refined fuels, especially diesel, raise concerns regarding the possibility of price increases, according to the agency, which is likely to lead to a significant reorientation of global diesel flows with the help of new buyers of crude oil in Russia who send fuel to Europe.
The agency’s report refers to India’s role in supplying fuel to Europe, as it has become one of the largest buyers of low-cost Russian crude oil since the outbreak of the war.
The report adds that a significant increase in Indian diesel flows would ensure that Russian crude is purchased and refined into diesel in India before being sold back to Europe.
Indian trade will not breach these European sanctions, but, according to the agency, they highlight the inefficiency of the sanctions, with the possibility of what Bloomberg described as “muzzier practices” with regard to fuel delivery and quality.
As for Russia, the new buyers of Russian oil will be from Africa, Latin America, and possibly Asia. Europe is likely to turn to the Middle East to meet its needs, as giant new refineries ramp up operations.
The agency quoted an expert as saying that Russia will not be able to sell more than a third of its diesel exports, and it will have to keep the rest.
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