Russian oil companies are having problems exporting diesel fuel, which has been subject to a European embargo and a price ceiling from the G7 countries since February.
Although discounts are already reaching one-third of world prices, Russian diesel is being stored in tankers that are drifting in the ocean waiting for buyers.
Source. Bloomberg writes about this with reference to the data of Kpler, a company that tracks tanker transportation.
As of March 5, 4.4 million barrels of diesel were "stuck" in ships turned into floating storage facilities.
Within a month, the volume of unsold fuel quadrupled and reached an all-time record. Even during the pandemic, when the oil industry was experiencing the worst overproduction crisis in its history, the amount of "excess" oil stored in tankers was half as much.
Russia continues to ship diesel from ports, "knowing that there is nowhere else to put it," says Mark Williams, an analyst at Wood Mackenzie.
According to Wood Mackenzie, starting in the second quarter, Russian refineries may cut oil refining by 1 million barrels per day. Exports of diesel, which traditionally went to the European market, will decrease by a third, from 1.1 to 0.75 million barrels per day.
Even discounts do not help: the price of Russian diesel has fallen by 35% since the beginning of the year. Although it was on par with European diesel back in November, it is now sold at a discount of $35 per barrel.
Finding demand in Asia, where Russia has already redirected its oil, proved difficult: India and China have their own refinery networks and are interested in buying raw materials for refining, not finished petroleum products.
Background. It was reported in February that after the introduction of the embargo, Europe quickly found a replacement for Russian oil products.