Russia seeks new fuel markets in Africa and the Middle East as Europe moves away

Refinitiv Eikon knowledge and sources present that Russia is growing gasoline and naphtha provides to Africa and the Center East because it struggles to promote the gasoline in Europe, whereas Asia is already buying extra Russian crude.

This growth is more likely to improve competitors with Asian clients between Russia and different main gasoline exporters – Saudi Arabia and america – the three largest suppliers to Asia.

The European Union has slowly diminished its imports of Russian crude and gasoline since March, agreeing to a full ban that can take impact by the tip of 2022.

Asian consumers stepped in to shortly improve their purchases of Russian crude, though Asia isn’t a pure marketplace for Russian gasoline as a result of Asia refines extra oil than it wants and is a internet exporter of the gasoline.

This makes discovering new niches akin to Africa and the Center East crucial for Russia to guard its world market share and keep away from a deeper decline in oil exports and manufacturing.

“Africa and the Center East appear to be the primary choices for suppliers of Russian oil merchandise, so we anticipate extra shipments there within the second half of the yr because the EU embargo approaches,” a dealer concerned within the Russian oil merchandise commerce advised Reuters.

Russia exported greater than 2.5 million barrels per day of crude and about 2 million barrels per day of gasoline to Europe earlier than sanctions have been imposed on the Russian monetary sector, which made buying and selling tougher.

Merchants stated that Russian oil corporations have lately elevated their provides of gasoline and naphtha to Africa and the Center East from the Baltic states. Earlier than the sanctions, many of the Russian provides to the areas got here from the Black Sea ports.

At the least 5 shipments carrying about 230,000 tons of gasoline and naphtha have been delivered from Could to June from the Baltic Sea port of Ust Luga to Oman and to the UAE oil hub in Fujairah, in keeping with Refinitiv knowledge.

The info confirmed that the entire provides of naphtha and gasoline from Russian ports to the Sultanate of Oman and the UAE amounted to just about 550,000 tons this yr, in comparison with zero in the entire of 2021.

Knowledge from Refinitiv Icon and Merchants confirmed that Nigeria and Morocco have been main locations in Africa for Russian gasoline and naphtha in latest months, whereas a number of shipments have been made to Senegal, Sudan, Ivory Coast and Togo.

Refinitiv Eikon knowledge confirmed that the entire month-to-month provides of Russian gasoline and naphtha to the area amounted to about 200,000 tons in latest months, together with masses shipped from storage on the ports of Latvia and Estonia.

Refinitiv knowledge and Reuters calculations confirmed that Russian diesel shipments to African nations reached a million tons for the reason that starting of the yr, up from 0.8 million tons in January and June 2021, with Senegal and Togo as the primary locations.

In Could, imports of Russian gasoline oil into Fujairah, the UAE’s oil hub, jumped sharply.

Merchants stated that regardless of rising freight prices, supplying Africa and the Center East with Russian oil merchandise helps buying and selling corporations keep revenue margins as choices for reselling oil merchandise in Europe are restricted because of sanctions.

“Sohar (in Oman) and Fujairah (within the UAE) can present storage and mixing capabilities for all these barrels, whereas European ports have began rejecting Russian oil merchandise,” stated a market supply concerned within the Russian oil merchandise commerce.

Evaluation of the native market

The change within the Russian export markets has led to an unprecedented disparity within the Russian home market. Summer time diesel is presently buying and selling at 30-40 % greater costs than gasoline, primarily based on Reuters knowledge. Gasoline is normally costlier than diesel.

Merchants stated that Russia had beforehand exported gasoline and naphtha to European buying and selling hubs, however was compelled to go to Africa and the Center East amid weak demand in Europe.

Consequently, home costs for these merchandise collapsed in Russia because of an oversupply.

Russian gasoline traded at $250-300 per ton decrease than the non-sanctioned European product, which was lately valued at round $1,330 per ton on FOB foundation.

Merchants stated the discount in diesel shipments was a lot much less – about $40-50 per tonne lower than the non-sanctioned European product – as a result of there was nonetheless robust demand.