The EU is banning—effective February 5—seaborne imports of Russian refined oil products, and it has to replace around 1 million barrels per day (bpd) of Russian fuel imports, including 600,000 bpd-650,000 bpd of diesel.
In December, for example, Russia’s diesel exports surged to a multi-year high of 1.2 million bpd, of which 720,000 bpd was destined for the EU, according to estimates in the latest Oil Market Report by the International Energy Agency (IEA).
In the Middle East, the top OPEC producers have ramped up – or pledged to ramp up – their exports of refined products to Europe.
Kuwait, for example, plans to raise its diesel exports to Europe fivefold this year – to around 50,000 bpd, a source with knowledge of the matter told Bloomberg last month. The Gulf oil producer, one of OPEC’s largest, also expects to double the sales of jet fuel to Europe in 2023 to nearly 5 million tons.
Kuwait National Petroleum Company also said this week that the Mina Al-Ahmadi refinery had sent its first shipment of diesel – of about 38,000 tons – developed for the European markets, which conforms to international environmental standards and specifications and is suitable for cold weather.
But Kuwait’s huge new Al-Zour Refinery, which will process 615,000 bpd of crude and can produce around 145,000 bpd of diesel, hasn’t reached full operational capacity yet. The refinery is expected to start up a second unit this month and a third and final line in April, according to Bloomberg.
Saudi Arabia’s Jazan and Oman’s Duqm refineries are also in the stage of ramping up, and analysts expect they could be able to fill in some diesel and other fuel gaps in Europe at the end of 2023 at the earliest.
“Middle East refining projects are subject to commissioning delays,” Ahmed Mehdi, a commodities analyst with Renaissance Energy Advisors, told Bloomberg.
“Europe won’t benefit from the additional barrels until late 2023,” Mehdi added.