Europe is set to import the highest monthly volumes of diesel and jet fuel in October as the EU moved to close a loophole in the sanctions against Russia and the U.S. sanctions on Russia’s top oil producers and refiners roiled the petroleum product markets.
Between October 1 and 20, European Union ports welcomed cargoes carrying nearly 1.9 million barrels of diesel and jet fuel from India, Saudi Arabia, the United States, and other countries, according to Kpler data compiled by Bloomberg.
If the import volumes hold at these level for the rest of the month, October could see the highest monthly EU imports of diesel and jet fuel.
Traders are racing to benefit from strong European product spreads and cracks as the EU will ban, effective January 21, imports of products made from Russian crude oil, per the July sanctions package against Russia.
In this package, the EU finally moved to close the Russian oil loophole, which currently allows EU imports of fuels processed from Russian oil, including in India, a key buyer of Russian crude until now.
“The EU is introducing an import ban on refined petroleum products made from Russian crude oil and coming from any third country – with the exception of Canada, Norway, Switzerland, the United Kingdom and the United States – thereby preventing Russia’s crude oil from reaching the EU market through the back door,” the EU said in the 18th sanctions package.
The global diesel market is set to further tighten with the U.S. sanctions on Rosneft and Lukoil, which are also exporters of petroleum products.
Crude oil prices have eased after last week’s rally following the sanctions. But middle distillates continue to strengthen, ING’s commodities strategists Warren Patterson and Ewa Manthey note.
“The ICE gasoil crack rallied above US$31/bbl, after trading around US$23/bbl mid-month. Meanwhile, the ICE gasoil Nov/Dec timespread surged to almost $20/t backwardation yesterday,” the analysts said on Tuesday.
By Tsvetana Paraskova for Oilprice.com
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