Gibson has addressed the new problems in the diesel market and pointed out the potential impacts arising from legal and political changes in this area. This analysis includes examining the possible effects of lifting restrictions on diesel exports from Russia and the existing legal challenges in this regard.
Status of Russian Diesel Exports
Gibson stated that the first problem in this regard is the volume of diesel exports as Russia currently lacks significant capacity for exports. Ukrainian drone attacks on Russian refineries have led to a decrease in domestic supply and consequently a ban on diesel exports by Moscow in July. Maritime exports from western terminals have decreased to an average of 510,000 tons per month in the third quarter of 2023, while this figure was 3.27 million tons per month last year.
After an agreement with the United States, the Russian government has begun to ease restrictions and has issued an export permit for 500,000 tons of diesel. It has also confirmed that it is ready to supply 300,000 tons of diesel for the United States this month, 500,000 tons in November, and 1 million tons in December. However, preliminary trade data indicates that exports in October are only slightly above the levels of the July to September period.
Legal and Political Challenges
Gibson also pointed out the existing legal challenges, noting that the new permit does not include sanctioned vessels, services such as refueling, and price caps. The laws of the European Union and the United Kingdom have not changed and trade and transportation of Russian diesel remain prohibited under the price cap. Banks and insurers in the EU and the UK cannot finance or insure shipments above this cap, which means that many shipments are likely to be above this cap.
In the United States, this permit may also face legal challenges, as the ban on Russian oil imports will only be lifted when the President certifies to Congress that the conditions have been met. In the short term, the volume of diesel exports will not reach significant levels unless the attacks on Russian refineries cease.
However, if Ukraine stops under pressure, the consequences of this decision will be much larger, as it would allow Russia to export more to its usual trading partners, not just the United States. Politically, the situation in Washington is changing, and given the social unrest in Europe, this continent may also be forced to reconsider its positions.
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