Middle East imports more Russian gasoil in September

Spanish Market: Oil products
19/10/22

Gasoil inflows from Russia to the Middle East have increased substantially as Russian diesel and gasoil exports to northwest Europe were falling as term contracts expired.

At 268,000t, September gasoil imports from Russia were significantly higher from 145,000t in August. The UAE was the main importer with 198,000t, followed by Yemen taking 38,000t and Iraq 26,000t, according to Vortexa.

Firms that are still buying Russian volumes on term contracts are slowly phasing out purchases, in preparation for the EU's ban on Russian oil products from January.

A halt in oil products from Russia is forcing European buyers to seek higher volumes from the Mideast Gulf, India and the US, in order to meet demand.

The Middle East remained a major outlet for Russian oil products in September, despite cargo arrivals falling from a record monthly high of 1.4mn t in August.

The total volume of product cargoes, including gasoline, naphtha, gasoil and fuel oil, declined to 1.06mn t last month.

But imports are still significantly higher than 250,000-450,000t of products that the Middle East typically received before the armed conflict with Ukraine started in February.

The quickly-formed surplus of Russian products, formed as international sanctions and restrictions started to squeeze deliveries to traditional buyers in Europe and the US, forced Russia to find alternative consumption markets and sell cargoes at significant discounts to benchmark prices.

"Russia has a limited storage capacity for its product surplus and is forced to sell on the cheap", a trader said. "Discounts are steep enough for buyers to make profit, despite long journeys, especially from the ports in the Baltic to the Middle East."

Rising imports by the Middle East are led by high-sulphur fuel oil (HSFO) — over 498,000t of HSFO landed in September, below 750,000t the previous month.

The UAE was the top destination for Russia-origin supplies, receiving 574,000t of products, down from 1.05mn t in July and 904,000t in August.

Imports of Russian HSFO into Fujairah fell to 86,500t in September from 345,000t in August.

Saudi Arabia was the second largest importer of Russia-origin oil products, with 412,000t of HSFO in September, up from 398,000t in August.

Gasoline and naphtha imports stood at 170,000t and 119,600t, respectively.

To reflect the changing trading flows and provide efficient price discovery mechanisms for buyers of Russian cargoes, Argus will start publishing price discounts of Russian-origin oil products against international market prices in its Argus Mideast Gulf and Indian Ocean (AMGIO) weekly report from 25 October.

By Elshan Aliyev

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