August 8, 2022

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European imports of Russian diesel jump, highlighting challenge to EU plans for ban

2 min read

Europe increased its imports of Russian diesel by more than a fifth in July, highlighting the big challenge the continent faces in breaking away from Moscow’s energy supplies and choking funding for its war in Ukraine.

The region imported almost 700,000 barrels a day of the fuel from Russia last month, higher than the previous month and a 22 per cent increase compared with July last year, according to Vortexa, a tanker tracking group.

The increase demonstrates the difficulty the EU will face in reducing its imports of Russian diesel to zero by February as the bloc has vowed to do in response to Russia’s full-scale invasion of Ukraine.

“We’re very far from Europe replacing Russian diesel,” said David Wech, chief economist at Vortexa. “I wonder whether Europeans will manage to fully carry through on the announced diesel import ban.”

In recent years, Europe’s reliance on Russia for the diesel supplies used by trucking groups, car owners and manufacturers has been steadily rising. Russia accounts for more than half of the region’s diesel imports, the Vortexa data show.

Europe’s reliance on imports from Russia, which roughly account for about 15 per cent of the region’s overall consumption, raises questions on whether the EU is prepared to face the full force of the sanctions it plans to implement.

In a sign of Europe’s concerns over global energy security, the EU eased sanctions last month on Russian state-owned enterprises such as Rosneft, allowing European companies to engage in transactions with them for oil destined for third countries.

Much of Europe’s diesel supply comes from turning crude into fuel products at refineries, but the continent is suffering from a shortage of refining capacity after pandemic-era cuts when demand for fuels dropped as people travelled less.

Wech said that going forward the “key question” was whether US refiners, which typically focus production on gasoline, would be attracted by the big margins on…

2022-08-02 06:49:50

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