The expert explained how Europe can buy fuel from Russian oil
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Moscow, February 7 – After the embargo on Russian oil and petroleum products comes into force, Europe may continue to buy Russian fuel, but not directly from Russia, but from Asian countries that will produce it from Russian raw materials, Sergey Kolobanov, Deputy Head of Economics of the Department of Fuel and Energy Complex of the Central Center For strategic research, commented on the News Agency.
Fuel sanctions imposed on a number of countries against supplies from Russia entered into force on February 5: the European Union banned the import of Russian oil products, while the European Union and the G7 countries set a price ceiling for them. The cap is set at $100 per barrel for oil products from Russia that trade at a premium to standard grade oil (diesel fuel), and $45 per barrel for products that trade at a discount (fuel oil). The six-month-delayed oil sanctions went into effect two months earlier – on December 5th.
“Due to the change in oil flows from Russia, a number of Asian countries may replace Russian refined products on the European market with oil products made from Russian oil (for example, India has been very successful in doing this already in 2022),” Kolobanov believes.
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The interlocutor with the agency also indicated that Asian countries are more interested in loading their new refining capacities with oil than they are in importing final fuel. Therefore, it will not be possible to completely redirect Russian oil products from Europe to the East, the expert believes, in connection with which a certain surplus of diesel and fuel oil may form in the domestic market.
“Formally, according to the laws of the market, overabundance should lead to lower wholesale prices, however, in Russia, the cost of fuel is more influenced by the financial mechanism in the oil industry (excise tax, damper, mineral extraction) and it depends on external conditions,” Kolobanov said. And the ruble exchange rate, so expect the reaction of domestic prices in such conditions.
