Page 6 - EurOil Week 20 2022

EurOil COMMENTARY EurOil

Downstream impact

NewsBase takes a brief look at some of the economic and political fallout from the Russia-

Ukraine war, with a focus on regional markets for jet fuel and diesel around the world

GLOBAL RUSSIA’S policy toward Ukraine has had a probably amounts to no more than a few per-
huge impact on world oil markets over the last cent of global liquids consumption, which the
WHAT: six months. Prices began moving upward late EIA has estimated at 97.4mn bpd in April 2022.
The reduction in Russian last year as Russian troops began gathering at However, the supply/demand balance on world
oil flows to world markets Ukraine’s border, and they have shot upward crude markets is delicate enough, with commer-
has affected jet fuel and since the outbreak of war on February 24. cial inventories being low enough, that even a
diesel prices, as well as This unprovoked invasion of a neighbouring small disruption can make a very big contribu-
crude prices. country has led a number of Western countries tion to pice volatility.
to impose restrictions on the importation of Rus- It’s important to note, though, that this vola-
WHY: sian oil, in an attempt to deprive the Kremlin of tility isn’t confined to crude oil markets. Global
Middle distillate prices one of its most important sources of hard cur- petroleum product markets are inevitably feel-
seem to be under even rency. It has also led a number of private-sector ing the impact of recent events too. However,
more pressure than organisations to spurn transactions involving middle distillates (diesel and jet fuel) have been
crude prices, and this Russian crude, partly to avoid sanctions pen- affected even more significantly than crude oil.
pressure is evident in alties in some jurisdictions and partly to avoid For example, data from oilprice.com show that
multiple regions. being seen as willing to do business in a country US heating oil futures climbed by about 55.3%
with such an unsavoury reputation. between the beginning of the year and May 18,
WHAT NEXT: These moves, in turn, have cut the volume of while WTI crude future went up by around
The EU’s planned Russian oil available on world markets. More- 45.1% over the same period.
embargo on Russian oil over, they have disrupted trade flows, forcing And these numbers from the US market are
imports has the potential Russian producers and traders to divert large not outliers. All around the world, middle dis-
to lead to further volumes of crude away from their usual destina- tillate markets are in turmoil, with significant
disruptions in trade tions in Europe to Asia or to take extraordinary consequences for the regional economic and
flows. measures to conceal the origin of their cargoes. political scenes. This article offers a brief look at
These cuts and disruptions have not brought some of these consequences.
Russian crude oil and gas condensate exports
– which averaged 4.7mn barrels per day (bpd) Europe
in 2021, according to the US Energy Informa- Prices for diesel and jet fuel have skyrocketed in
tion Administration – down to zero, but they Europe this year, owing to a seemingly perfect
have reduced them. The extent of the disruption storm of factors. Jet fuel was end-priced at 120%

P6 www. NEWSBASE .com Week 20 19•May•2022