Russia and the USA put the price of diesel in Europe at risk
The price of fuel, diesel in particular, risks receiving a further upward push from two different pieces of news coming from Russia and the USA which show how European de-industrialisation makes the Old Continent weak and fragile.
Let's start in Moscow. Russia has succeeded in lowering wholesale gasoline prices by implementing a ban on diesel exports.
Russia has moved to ban the export of diesel starting in October, including all cargoes from Black Sea and Baltic Sea ports. The ban was part of a government effort to stabilize domestic fuel prices. Russia's ban on diesel exports was expected to further tighten the already tight global distillates market ahead of winter, a period when demand is expected to increase. Diesel prices in Europe increased after the ban was announced.
The move is working: In Russia, diesel prices fell 4.97% on Monday, to 59,130 rubles per ton, according to the St. Petersburg International Mercantile Exchange (SPIMEX). Russian Deputy Prime Minister Alexander Novak said over the weekend that the fuel export ban was already starting to produce results, resulting in lower gasoline and diesel prices. Wholesale gasoline Ai-92 fell 1.94% on Monday alone, to 56,945 rubles per ton, or $576.45 per ton.
Russia's self-imposed ban on fuel exports is ironic as the European Union moved to halt Russian seaborne fuel imports earlier this year to curb Russia's revenue from crude oil and its products , in an attempt to weaken his war chest. European fuel prices rose after the ban on Russian fuel imports, and have now risen again due to the Russian ban.
Now to the United States : Nearly 2.5 million barrels per day of oil refining capacity will go offline in the U.S. due to a combination of major, overlapping maintenance, Bloomberg reports , and the cutbacks could continue next year.
In what Bloomberg describes as the “heaviest” maintenance season since before the COVID-19 pandemic, between September and December this year, the United States will lose nearly 2.5 million barrels per day of refining capacity, citing data from Energy Aspects LTD.
Those 2.5 million barrels per day represent an 11% increase in offline capacity compared to the same period in 2022.
The reductions in refining capacity come as the Energy Information Administration (EIA) releases data showing that U.S. exports of petroleum products reached nearly 6 million barrels daily in the first half of this year, up 2% from same period of 2022.
Of these increases in the first half of 2023, propane was the “most exported,” averaging 1.5 million barrels per day. Over the past four years, the EIA says propane exports have been driving the increase in overall U.S. petroleum product exports, particularly with exports to Asia and secondarily to Central and South America.
So two apparently unconnected but coincident events risk sending diesel and fuel prices skyrocketing, just as Europe is still facing the last stages of a serious energy crisis. These events will weigh on the price of diesel which in turn will influence inflation. We will see if the ECB will understand the causes and if the national states will abandon the commission's green demagoguery and start expanding refining plants again .
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The article Russia and the USA put the price of diesel in Europe at risk comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/russia-e-usa-mettono-a-rischio-il-prezzo-del-gasolio-in-europa/ on Tue, 03 Oct 2023 08:00:42 +0000.