Revenues of diesel fuel producers are decreasing. In Europe, local refineries have to compete with oil products from India and China, which were produced from cheaper Russian raw materials.
Diesel producers’ margins have fallen by nearly half as Russian oil exports continue and China and India reached record fuel production in March. According to Reuters, the two Asian giants continue to increase both imports of raw materials from Russia and exports of petroleum products from Russian oil.
In addition, Russian oil products continue to be exported in large volumes – to oil hubs, from where they are already re-exported to other countries.
According to Reuters estimates, the margin of European refineries for diesel fuel has fallen to its lowest level since February 2022 – $ 13.7 per barrel. At the same time, profits from refining the benchmark North Sea grade Brent fell by 71% – to $ 3.56 per barrel in April.
Another problem for European refineries is the shortage of medium sulfur crude. After the withdrawal of Russian crude, refiners relied on crude from Kurdistan. However, supplies have not resumed since the end of March, when Iraq forced Turkey through an arbitration court to stop transporting Kurdish oil without agreement.
Energy Aspects analysts predict, Bloomberg reports, that in such a situation Europe will have an uphill battle with Asia in the crude market. The fact is that mainly Chinese refineries are increasing their imports of medium sour crude, while the Middle Eastern countries are processing more and more crude at their own refineries.
As EADaily reported, the United States, as well as the European Union, banned imports of oil products from Russia. However, in February it set a historical record for imports of Indian oil, which is produced mainly from Russian oil. According to the Indian Ministry of Commerce and Industry, 6.28 million barrels were shipped across the Atlantic and received $738 million for them. The previous record was set in July 2013 at 5.2 million barrels.
More than the United States from India buy only the Netherlands, which also no longer receive Russian products, but is a global hub for oil and petroleum products trade. The country’s companies transferred $1.4 billion for February deliveries to India and received, for example, 7.1 million barrels of diesel fuel and 4.7 million barrels of jet fuel.
At the same time, Russian oil is not so cheap for Indian companies. If the Ministry of Finance estimated the cost of raw materials in the Russian ports of shipment at around $50 per barrel, the Indian companies were taking it at their terminals for almost $73.
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