Russia's seaborne exports of refined oil products rose to a three-month high in September, but the growth came from cheaper fuel oil and naphtha as diesel shipments fell to their lowest in more than a decade, Bloomberg reported, citing Vortexa data. Russia kept diesel at home after Ukrainian refinery strikes and paid oil companies to supply its pumps, while high crude prices lifted its crude export earnings.
During the ongoing deep-strike campaign, Ukraine's long-range drones have knocked out more than half of Russia's oil refining capacity, Kyiv says, and Russia's budget oil revenues are falling even as it raises war spending. High global crude prices are softening that blow.
Total seaborne product exports reached about 1.17 million barrels a day in September. Fuel oil shipments rose 6% to about 613,000 barrels a day, the highest since April. Naphtha, a feedstock for petrochemicals, jumped 35% to 363,000 barrels a day. Exports of refinery feedstocks, including vacuum gasoil, rose to about 32,000 barrels a day, according to Bloomberg.
The trade has moved north. Almost 80% of fuel oil cargoes left from Baltic ports, and naphtha loadings there rose almost 50% as Ukrainian attacks disrupted Black Sea infrastructure. In September, Ukraine reported hitting an oil terminal in Novorossiysk, Russia's main Black Sea oil port—one in a string of attacks on Russia's Black Sea ports and oil sites.
Diesel and gasoil exports fell 28% to 144,000 barrels a day, the lowest monthly volume in Vortexa data going back more than a decade. Russia has restricted diesel exports to protect domestic supply after Ukrainian attacks on its refineries. Drones kept hitting them into October, from a Lukoil refinery in Volgograd to Gazprom's Salavat complex in Bashkortostan.
In September, Russia paid oil companies the biggest subsidy in more than four years to keep road fuel on the domestic market. It also imported about 350,000 tonnes of motor fuel by sea, mostly gasoline from India, Morocco, and Türkiye, Reuters calculations showed. Officials are considering letting some producers resume diesel exports in October to avoid overstocking, according to Interfax.
The diesel squeeze has reached the White House. US President Donald Trump stated on 30 September that diesel was hurt "not by the Middle East, but by what's going on in Russia, because those diesel refineries are being knocked out at a pretty alarming rate."
Russia's crude exports reached about 3.99 million barrels a day in the week to 27 September, and the estimated value of its seaborne crude shipments neared its highest since the full-scale invasion began, Bloomberg reported. Brent crude traded at about $102.60 a barrel on 9 October, according to Trading Economics data.
Oil prices fell on Friday after European governments agreed to release emergency diesel reserves, bringing additional supplies onto a market strained by disruption in the Middle East and shortages of refined fuel.
Brent crude futures fell $1.80, or 1.76 per cent, to $100.50 a barrel during trading on 2 October, while US West Texas Intermediate dropped $2.02, or 2.18 per cent, to $90.85, according to market data reported during Friday’s trading.
The fall came as the Group of Seven agreed to release 100 million barrels of oil and petroleum products from emergency stocks over four months. The package includes a substantial release of diesel during the first 20 days.
The G7 leaders’ statement on energy security and market stability said the releases would be co-ordinated through the International Energy Agency and would take account of commitments already made earlier this year. G7 governments will also discuss whether additional diesel releases are required.
The agreement marks a rapid development from the negotiations reported earlier on Friday. As EU Today reported before the G7 meeting, Washington had been pressing European governments, particularly France and Germany, to make more of their strategic diesel stocks available.
President Donald Trump had also raised the possibility of restricting US diesel exports as his administration sought to reduce domestic fuel prices. Such a restriction would have had significant consequences for Europe because the United States has become an important supplier of diesel to the European market.
A French proposal discussed by EU governments earlier on Friday envisaged European countries releasing around 50 million barrels of diesel, alongside another 50 million barrels of crude oil from International Energy Agency members.
The eventual G7 agreement also addresses the risk of export restrictions directly. The seven governments committed themselves to avoiding restrictions on energy and energy-product exports between G7 countries and called on other producers to refrain from measures that could worsen market shortages.
For Europe, the intervention comes as diesel supplies remain physically available but prices are being pushed higher by tight conditions on international markets.
The European Commission’s Energy Union Task Force met on Friday to examine diesel supplies and prices. The Commission said EU diesel supplies remained stable for the time being, but acknowledged that prices were high because of tight global markets.
The latest intervention follows a much larger emergency action earlier this year. In March, the International Energy Agency agreed its largest-ever co-ordinated stock release, making 400 million barrels available after the Middle East conflict severely disrupted international oil markets.
Europe’s contribution to that March operation consisted largely of refined petroleum products rather than crude oil, reflecting the particular pressure facing the continent’s fuel markets.
The pressure is part of a wider European energy problem. EU Today reported this week that the Middle East conflict has added more than €100 billion to Europe’s energy import bill, despite the continent receiving no corresponding increase in the physical amount of oil and gas purchased.
European governments have already committed €17.9 billion this year to measures intended to protect households and businesses from the rise in energy costs, according to an EU Today assessment of national support measures.
Diesel represents a particular vulnerability. It remains essential for road freight, agriculture, construction and large parts of European industry, meaning sustained increases in wholesale prices can feed into transport and production costs across the economy.
The present shortage also reflects changes in Europe’s refining sector. Refining capacity has fallen over the past two decades as plants have closed, increasing dependence on imported diesel and other refined petroleum products. That dependence has become more visible since the EU sharply reduced purchases of Russian fuel following Russia’s full-scale invasion of Ukraine.
The G7 nevertheless made clear that the emergency intervention would not be accompanied by a relaxation of measures against Moscow. Leaders said they would maintain sanctions against Russia while working with the IEA and other partners to limit the effect of market disruption on fuel and commodity prices.
The EU has separately continued to tighten measures targeting Russia’s energy revenues and its so-called shadow fleet, including restrictions connected with the maritime transport of Russian oil and petroleum products. The EU’s latest sanctions package targeting Russian energy revenues was adopted in July.
Friday’s fall in oil and diesel futures indicates that traders expect the additional stocks to relieve some of the immediate pressure on supplies. European gasoil futures, the main regional diesel benchmark, also fell sharply during the day as details of the proposed releases emerged.
The G7 has asked the IEA to monitor implementation and report within 20 days, including on whether further action is required and how emergency stocks should eventually be replenished.
For Europe, the immediate objective is to contain diesel prices without compromising security of supply. The broader issue remains unchanged: reduced domestic refining capacity and heavy dependence on imported fuel leave the European economy exposed when international supply routes are disrupted.
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Oil prices rose more than 2% Monday after the United States attacked an Iranian island in the Strait of Hormuz and drew retaliation from Tehran, as the six-month-old conflict between the two countries showed no signs of easing. Brent crude futures climbed $2.21, or 2.51%, to $90.31 a barrel as of 0436 GMT. U.S. West ... Read more
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