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Russia to boost diesel exports in Feb despite embargo, price cap

Russia plans to boost diesel exports in February in attempt to cope with a European Union embargo, price cap and lack of tankers, data from traders and Refinitiv showed.

A full embargo of Russian oil products imports to EU countries goes into effect on Sunday, and the Group of Seven (G7) is also imposing price caps on Russian fuel shipments.

Despite the expected restrictive measures, total exports of low-sulphur diesel and gas oil from the Russian Black Sea and Baltic ports are expected to grow in February by 5% to 10% month-on-month to 4.2 million to 4.3 million tonnes, data from traders and Reuters calculations showed.

Russia has already ramped up its diesel supplies to Turkey and Morocco, seeking to reroute the oil products ahead of an EU embargo.

However, the actual diesel loadings from Russian refineries could be lower than planned this month, market sources said.

“Apart from embargo, refined products shipments could be hit by stormy weather in Black Sea ports of Novorossiisk and Tuapse,” one of the traders said.

Storm delays and export limitations in ports may spark supply chain disruptions: rail congestion, storage overstocking and cuts in refinery runs.

The Russian refineries also could reduce fuel production depending on price cap levels which are yet to be determined, traders said.

“With margins turn negative, oil products output could be decreased fast and significantly”, one trader added.

The lack of available tankers is another limiting factor, Reuters sources added.

Source: Reuters

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