By Ahmad Ghaddar, Shariq Khan, Trixie Yap and Enes Tunagur
LONDON (Reuters) – Global diesel prices and refining margins rose after the latest round of U.S. sanctions on Russia’s oil trade on expectations that the measures would tighten the offer, according to analysts and LSEG data.
The United States imposed its toughest sanctions on Russian producers and tankers on Jan. 10 to curb the world’s No. 2 oil exporter’s revenue over its war in Ukraine.
Many of the vessels just targeted, part of what is called a shadow fleet that seeks to circumvent Western restrictions, were used to ship oil to India and China. Refiners in those countries benefited from cheap Russian imports that were banned in Europe after Moscow’s invasion of Ukraine.
“Diesel (profit margins) are rising after the news about the sanctions, and we expect significant disruptions to Russian diesel exports,” Energy Aspects analyst Natalia Losada said. He added that at least 150,000 barrels per day (bpd) of Russian diesel exports from the Gazprom Neft and Surgutneftegas refineries are at risk.
The price of the first month of the benchmark European diesel contract for six months later rose to $50.25 a metric ton on Thursday, a 10-month high, LSEG data shows.
The diesel market was already in backwardation, the term used for a market structure whereby nearby contracts trade at a premium for later delivery contracts. This usually denotes tight punctual supply.
Diesel refining margins were at a five-and-a-half-month high of $20 a barrel on Thursday.
The cold weather in the northern hemisphere was already supporting the diesel markets.
Asian diesel refining margins jumped 8% on Monday to above $17 a barrel, the biggest gain since September, before falling to around $16.50 a barrel on Thursday.
U.S. diesel futures rose more than 5% on Jan. 10, their biggest daily gain since October, and hit a six-month high of $111 a barrel on Thursday. Next month’s diesel commands a premium of more than $10 over the six-month contract, the largest premium in nearly a year.
Traders and refiners have factored higher crude costs into fuel prices and refining runs, two Singapore-based business sources said, adding that lower Russian diesel flows are unlikely to have a big impact. directly on the Asian markets.
Even with higher diesel margins, Asia’s complex refining margins weakened as crude prices gained at a much faster pace than refined product prices, a third source said.
Dubai cash prices have risen by 8.5% since last Friday, while Singapore’s February diesel exchange has only risen by 5.5% over the same period.
https://media.zenfs.com/en/reuters-finance.com/cc662c7e8f33d6389a3d0650831f388f
2025-01-17 08:02:00
