Diesel, new tensions since the EU stop using Russian crude oil

Diesel futures - which had exceeded USD 800 per tonne in June in London - now trade at around USD 715. But the spread against Brent crude (the benchmark for refining margins) has spiked above $26 per barrel, the highest since February 2024.

According to S&P Global Commodities at Sea (Cas), Europe received 124 thousand barrels per day of diesel or gasoil from India and 94 thousand from Turkey in June, accounting for 7 per cent and 5 per cent of total imports, respectively. In the same month, Mumbai imported 1.66 million barrels of Russian crude oil per day, overtaking China as the largest buyer, while Ankara bought 383 thousand barrels per day, placing third.

Other estimates, by Kpler, which also include aviation fuel, indicate that India - until a few years ago non-existent as an exporter - accounted for 16% of European imports in 2024, when Russian crude oil accounted for 38% of Indian imports.

What prevented excessive market shocks for the time being was Brussels' clarification that the bans will only come into effect on 21 January 2026. In addition, it is clear that supervision will be problematic, to say the least, in the absence of an international supply chain tracking system: there is no analysis that can distinguish the origin of each molecule of a petroleum product after refining (blends, i.e. mixtures of different crudes, are generally used).

Finally, it is not certain that the global supply will shrink too much: it is likely that a carousel of product transfers will soon begin, to confuse the origin and place of refining. Brussels, on the other hand, has a priori exempted supplies of fuel from net crude oil exporting countries from controls: a category which includes, for example, the USA, but also the United Arab Emirates, although in this country several companies have been hit by Western sanctions precisely on the accusation of having facilitated 'illicit' exports from Russia.

In June, the US was the largest exporter of diesel to Europe, with 380,000 bg for S&P Global Cas, followed by Saudi Arabia with 190,000 bg. Significant supplies also come from the Arab Emirates and Kuwait, which in recent years have built huge refineries. Looking ahead, exports from these countries are likely to increase further, not least because - despite the postponement of bans and the difficulty of controls - buyers seem to have already raised their guard.

On Tuesday 22, Reuters reported that an oil tanker sent by BP to India to load fuel had turned around: it was bound for the Varinar plant of Nayara Energy, in which Rosneft owns 49.13%, the only company identified by the EU as responsible for the export of Russian crude oil products, which reacted with a harsh statement, but also with an immediate request to customers for advance payments or letters of credit.

Other plants also use Russian crude oil and export fuels - so far without committing any offences. Analyses by the think tank Crea (Centre for Research on Energy and Clean Air) point in particular to Reliance's Jamnagar refinery in India, the largest in the world, and in Turkey the Star owned by Azerbaijan's Socar.