On October 22, 2023, Russia will send its first diesel tanker with a capacity of 40,000 tons to the United States. Alexander Novak, the Deputy Prime Minister of Russia, announced that this shipment will depart from the Baltic Sea coasts of Russia, and subsequent shipments will follow. This is the first time such a shipment has been sent to the United States since the sanctions were imposed in January 2022.
Background of Russian Diesel Exports
As the second-largest exporter of marine diesel in the world, Russia faces limitations in its export capacity due to attacks on its refineries by Ukraine. However, Russia has taken steps to reduce part of the diesel export ban that was imposed to conserve its domestic resources. Novak stated that Russia has not yet fully resumed its diesel exports but will do so "based on the capabilities of its refineries."
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Export Outlook and Market Impacts
Novak predicted that by the end of the year, Russia could restore its full diesel export volume and expand shipments to other countries. He also noted that Russia typically consumes between 3.5 to 4 million tons of diesel per month and could achieve exports of 3.5 million tons per month. In October, Russia is prepared to send 300,000 tons of diesel to the United States and another 500,000 tons in November.
According to data from S&P Global Commodities at Sea, Russia has so far sent approximately 400,000 tons of diesel internationally in October, primarily to countries like Egypt, Morocco, Turkey, and Brazil. Following the announcement from the United States, exports have more than doubled.
According to Novak, Russia typically produces 7.5 million tons of diesel per month, although frequent attacks on the country's refining sector have impacted production. Given that Russian diesel exports to the United States had been halted since 2022, this action could have implications for global prices.
Vladimir Putin, the President of Russia, also announced that several tankers are being prepared for shipment, and the first tanker will depart soon. He emphasized that "the key now is to ensure the financial aspect is in place so that everything works as expected." However, some traders and analysts believe that the volumes discussed represent only a small portion of the United States' import needs and are unlikely to have a significant impact on international prices.
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