The increase in the global price of diesel after the new US sanctions
reported by Mehr News Agency quoted by Rashatudi, the global price of diesel and its refining profit margin have increased sharply following the new round of American sanctions against the Russian oil sector.
This increase is due to traders’ predictions of a decrease in the supply of diesel and crude oil. Reuters confirmed this in a report published on Friday, citing analysts and data from the London Stock Exchange (LSEG). Also last week, the outgoing US administration imposed a new round of “broad” sanctions against Russia in coordination with the British government.
These sanctions are two major oil producers, namely “Gazprom Naft” and “Surgut Naftgaz”, and targeted more than 180 ships that were allegedly used to transport Russian oil by circumventing Western sanctions. America has described these ships as “shadow fleet”.
According to Reuters, in the week after these sanctions were imposed, the Western European diesel benchmark reached its highest level in 10 months. The futures market represents a limited supply or market deficit, where the price of current month contracts is higher than future months contracts.
In the futures market, the prices for the delivery of goods in different months are different. Futures contract prices are usually expected to be slightly higher as storage costs are factored in. But if the price of the current month’s contracts (Front-Month Contracts) is higher than the contracts of future months (Further Out Contracts), this indicates a current shortage or anxiety in the market. This situation is called “backwardation”.
Diesel refining margins hit their highest level in more than five months on Thursday, rising to $20 per barrel. “Natalia Losada” energy analyst Aspects told Reuters: “Diesel margins have increased following the news of sanctions, and we expect significant disruptions to Russian diesel exports.”
He emphasized that at least 150,000 barrels per day of Russian diesel exports from Gazprom refineries Oil and Surgut oil and gas affected by sanctions are in danger.
