Russia has extended a ban on most diesel exports through October, tightening global supply just as Northern Hemisphere winter demand rises. The curbs, in place since July, coincide with a diesel premium over crude oil that stood at about $82 a barrel in Europe, up from roughly $28 in February, and with President Trump weighing his own US export ban.
Moscow enacted the diesel export ban for producers in July after a wave of Ukrainian strikes against its refineries dragged oil-processing rates to multiyear lows. The curbs, initially meant to last a matter of weeks, were extended through August and then to the end of September as the attacks continued.
Government cites harvest-season fuel demand
The Russian government said Wednesday the ban would run through October, "to support stability of the domestic fuel market", also citing higher demand for motor fuels during the harvesting season. The ban on exports of most bunker fuel and gasoils has also been extended through the end of October.
Diesel's premium over crude widens
Before the restrictions and Ukraine's intense refinery attacks, Russia accounted for roughly 10% of global seaborne diesel supplies. Pulling that volume from the oil market compounded disruption to flows through the Strait of Hormuz, pushing up prices for the fuel that powers trucking, farm equipment and industry worldwide.
Diesel's premium over crude oil is now around $82 a barrel in Europe, according to Bloomberg fair-value data. That compares with about $28 a barrel at the end of February, before the US and Israel launched the war on Iran and Ukraine stepped up its attacks on Russian refineries.
Trump weighs a US export ban
As pump costs hit records in America, Trump has mulled banning US diesel exports, and analysts have warned such a move could supercharge overseas prices, especially in Europe. Earlier this month, Trump blamed the price hikes on the Russia-Ukraine conflict rather than the Iran war he started, and said Moscow and Kyiv had agreed to stop hitting each other's energy assets. Neither side confirmed a truce, and attacks on energy infrastructure continued.
Trump said Sunday he was looking very seriously at implementing an export ban as he comes under pressure to rein in domestic fuel prices. Diesel prices in Europe could rise as much as 50% if the US bans exports, according to research from Oxford Economics and Goldman Sachs, likely prompting the region to release emergency reserves.
Source: Rigzone
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