International diesel rates increase following recent US sanctions on Russia

(MENAFN) Global diesel prices and refining margins have surged following the latest round of US sanctions targeting Russia’s oil industry, which have sparked concerns about potential reductions in diesel and crude oil supply. The sanctions, imposed last week in coordination with the UK, focused on major Russian oil producers gazprom Neft and Surgutneftegaz, along with over 180 vessels allegedly part of a "shadow fleet" transporting Russian oil to bypass Western restrictions.

In the aftermath of the sanctions, the benchmark diesel contract in Western Europe hit a ten-month high, and refining margins rose to their highest level in five months, reaching $20 per barrel. Analysts predict that disruptions to Russian diesel exports, especially from Gazprom Neft and Surgutneftegaz, could further tighten supply, with an estimated 150,000 barrels per day of Russian diesel at risk.

The sanctions also have the potential to affect refinery operations in India and China, potentially decreasing diesel exports to the EU, which relies heavily on diesel for transportation, aviation, and heating. This price surge may place additional strain on the already struggling EU economies. Meanwhile, Russia’s top diesel buyers, Türkiye and Brazil, may seek alternative suppliers from the US and Middle East, intensifying competition for European buyers.

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