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

MOSCOW (Reuters) – Russia is growing gasoline and naphtha provides to Africa and the Center East because it struggles to promote gasoline in Europe, whereas Asia is already receiving extra Russian crude, knowledge from Refinitiv Eikon and sources confirmed.

This improvement 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 decreased its imports of Russian crude and gasoline since March, agreeing to a full ban that can take impact by the tip of 2022. Learn extra

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Asian patrons stepped in to rapidly improve their purchases of Russian crude, though Asia is just not a pure marketplace for Russian fuels as a result of Asia refines extra oil than it wants and is a web exporter of the gasoline.

This makes discovering new niches resembling Africa and the Center East essential 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 principle 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 informed 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 had been imposed on the Russian monetary sector, which made buying and selling tougher.

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

Not less than 5 shipments carrying about 230,000 tons of gasoline and naphtha had been delivered from Could to June from the Baltic Sea port of Ust Luga to Oman and to the Emirates Oil Heart in Fujairah, based on Refinitiv knowledge.

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

Information 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 whole 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 international locations reached a million tons because the starting of the yr, up from 0.8 million tons in January and June 2021, with Senegal and Togo as the principle locations.

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

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

“Sohar (in Oman) and Fujairah (within the UAE) can present storage and mixing capabilities for all these barrels, whereas European ports have began to reject Russian oil merchandise,” mentioned 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 home market of Russia. Summer season diesel is at present buying and selling at 30-40% larger costs than gasoline, primarily based on Reuters knowledge. Gasoline is normally costlier than diesel.

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

Because of this, home costs for these merchandise collapsed in Russia attributable to an oversupply.

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

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

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Reported by Reuters. Modifying by Jane Merriman

Our standards: Thomson Reuters Belief Rules.

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