Page 6 - AfrOil Week 06 2023

AfrOil COMMENTARY AfrOil

Africa rallies to Russia’s rescue

As EU bans imports of Russian fuels, African states increase their purchases

AFRICAN states boosted the import of Russian supplies of diesel due to the sanctions coming
petroleum products, including all-important on top of a Chinese economic rebound driving
WHAT: diesel exports, in January ahead of the imposi- up demand there as the economy emerges from
Deliveries of Russian tion of the latest round of sanctions on Russian a year of COVID lockdown.
refined fuels, including petroleum products. The outlook for the success Exports of diesel and kerosene to Europe
diesel, were reported up of the EU’s oil product sanctions remains very surged by about 25% in the last three months of
in January 2023. confused as the market races to remake itself in 2022 on the previous quarter as Europe antic-
the face of the new realities. ipated possible supply problems after the Feb-
WHY: Russia is being forced to remake its oil export ruary 5 ban came into affect, according to the
The EU’s ban on imports business after the EU banned all imports of w. Diesel inventories in the key Antwerp-Rot-
of Russian petroleum
products took effect on crude on December 5 and at the same time fol- terdam-Amsterdam region have risen to their
February 5. lowed up by launching an oil price cap scheme. highest level since October 2021, according to
The second phase of the energy sanctions analysts at Redburn, as cited by the FT.
WHAT NEXT: has just come into force, as the EU banned all Diesel supplies are already tight, pushing
African states can be imports oil products on February 5 and imposed up prices at the pump to well above gasoline in
expected to re-export a similar price cap scheme on these much more many regions. European countries are among
some of the Russian fuel, widely distributed products. the world’s largest users of diesel relative to
but these shipments will Diesel is one of the most important. The EU other motor fuels, reports the Financial Times.
not be enough to offset continued to receive more than a quarter of its However, many European countries have been
Moscow’s losses from diesel imports (about 612,000 barrels per day creating a cushion by stockpiling diesel ahead
the loss of access to or bpd) from Russia in January, while the bloc of the products ban, which was telegraphed well
European markets. comprised roughly 41% of the Russian export in advance.
market in January and now must find new
buyers. Emerging way station
In anticipation of the remake of the diesel Now Africa is emerging as another major way
market, Turkey and several African countries station. Kpler told the Insider that it has already
have sharply increased their imports of Rus- seen an uptick in volumes heading to Africa
sian diesel. Analysts say these countries will in January to countries including Senegal,
anonymise this diesel and sell it on to customers Morocco, Tunisia and Libya.
in Europe and further afield through various Just before the EU decision to ban imports
means such as mixing with other diesels or fur- against Russian petroleum products, Turkey and
ther refining it. Morocco already stand out as the most impor-
Analysts at Kpler speculated that African tant importers of Russian refined products.
nations, many of which support Russia or at least Turkey imported 213,000 bpd of Russian die-
remain neutral, will consume more Russian die- sel in December, reaching its highest level since
sel or export it back to the EU. In the same game 2016, according to Vortexa Ltd. A similar trend
of musical chairs, the EU will also start sourcing was seen in Morocco, which has also noticeably
diesel from further away, from the likes of the stepped up imports of diesel from Russia.
US and Asia. Currently, Russia is the EU’s largest supplier
India has also become a major way station on and the upswing in imports by Morocco and
the round-the-houses routes Russian crude and Turkey to re-export to the EU will not be enough
products are being forced to follow to reach their to offset Russia’s losses when European imports
traditional and newly acquired customers. India ceased.
imported more Russian crude oil than ever in However, determining what happens then
January, and it has been refining and selling on is very hard, and as a result of the threat of sec-
to the EU and the US, despite the ban on imports ondary sanctions the petroleum product market
of “Russian” oil and its products. India imported has become very opaque. Several professional
1.27-1.42mn bpd of Russian crude, which com- energy news services have had to start to resort
prised 28% of total supplies in January, the high- to surveys and anecdotal reporting, as traders
est ever. Two years ago, India imported almost and companies become reluctant to report on
no oil from Russia at all. their deals volumes and price.
Likewise, China’s privately owned refiner- In addition to diesel, Russia produces a range
ies have massively increased their imports of of other refined products, including jet fuel and
Russian crude and are selling the refined prod- fuel oil, requiring separate price caps for each,.
ucts on to customers in the US and EU as well. Analysts say Russia will be forced to offer dis-
Analysts are afraid of a combined fall in Russian counts on these, as well as find new buyers. ™

P6 www. NEWSBASE .com Week 06 09•February•2023