SAUDI ARABIA IMPORTS RUSSIAN DIESEL – RESELLING TO THE WEST
Saudi Arabia – a supposed US ally – is buying record amounts of Russian diesel to evade US sanctions on Russian crude and oil product imports.
The kingdom imported 261,000 tons of Russian diesel over the past two months at a cost roughly $20 lower than the Middle East benchmark. As a whole, the Middle East exported more than 1 million tons of diesel to northwest Europe during Q1 of this year (compared to 785,000 tons per month during Q4 of last year).
Monthly exports to Africa reached 2.57 million tons in March; an increase from 1.3 million last year.
As Middle Eastern nations like Saudi Arabia and Kuwait provide more industrial fuel to Europe and Africa, Asian suppliers are finding themselves pushed out of the market entirely. This is occurring as prices and margins in the east are “already hovering at their lowest in more than a year,” notes a report from Reuters.
The increasing supply is expected to impact global refining margins, which could drop as low as $6.60 per barrel during Q4 (compared to $11 during Q4 of 2022).
In the meantime, traders are taking advantage of low prices to stock up on fuel at major oil hubs in SA and UAE before re-exporting it. More than 500,000 tons of fuel is said to have been discharged at these hubs during the month of March.