Will the embargo push up diesel prices?
Important news for European carriers: all indications are that, even though there is an embargo on Russian supplies, there should be no shortage of fuel for trucks in 2023. Kuwait has just announced that it plans to increase the supply of diesel and jet fuel to the Old Continent five-fold. Kuwait plans to deliver in 2023, 2.5 million tonnes of diesel fuel. While this will not cover the needs of the European economies, other countries in the Middle East, such as Saudi Arabia and the United Arab Emirates, have also announced increased supplies. This is all the more important as the EU embargo on Russian crude supplies comes into force on 5 February. Unfortunately, according to the US agency Bloomberg, this could result in higher fuel prices on European markets.
According to Jakub Bogucki, an expert from the fuel portal e-petrol.pl, at present, the biggest challenge for the European market will be the availability of diesel and not the price quotations on global stock exchanges. It is the availability (or lack thereof) that will regulate the price of diesel in the coming months. To date, Russia has met approximately 40% of the European market’s needs for this fuel.
Access to diesel is not only about the possibility of shipping itself, but also about the way in which the raw material is refined. Meanwhile, not all refineries are ready for this, and for increased capacity. This is all the more so given that, before the outbreak of the war in Ukraine, there was a trend away from diesel towards electric and gas power. Before the embargo comes into force, however, fuel market experts are reluctant to make any final judgment on diesel availability and price levels.