Saudi Arabia is importing millions of barrels of diesel from Russia, despite having more than enough of its own.
(Bloomberg) — Saudi Arabia is importing millions of barrels of diesel from Russia, despite having more than enough of its own.
The kingdom is the world’s top crude exporter and a significant seller of petroleum products. Yet it imported almost 2.5 million barrels of diesel-type fuel from Russia in the first 10 days of March, far more than at any other time in the last six years, according to Kpler data compiled by Bloomberg.
At the same time, vast amounts of the fuel continue to be sent from Saudi Arabia to Europe, which on paper looks like a potentially lucrative move. The flows also show how the global energy trade is being rerouted in the wake of sanctions on Russian supplies.
“It is a profitable trade,” said Eugene Lindell, head of refined products at consultancy Facts Global Energy. It’s also good for Russia as it means they don’t have to cut refinery runs, he said.
Russia has had to find replacement customers for its fuel since the European Union last month banned seaborne imports of its diesel and other oil products in response to the invasion of Ukraine. Russia’s exports of diesel-type fuel to Brazil, Morocco, Turkey and Tunisia have risen in recent months too, and many barrels are being held in floating storage.
While the precise economics of diesel shipments in and out of Saudi Arabia are hard to know, traders could potentially turn a profit by essentially buying Russian fuel while also selling to Europe at a higher price. Turkey’s imports of diesel-type fuel from Russia have soared in recent months, and the country is simultaneously exporting vast quantities of product to the EU.
Saudi Aramco said it imports refined petroleum products from multiple sources to meet domestic demand. “The company continues to try to balance these needs, and this has been the practice since before the Russia-Ukraine conflict,” it said.
–With assistance from Prejula Prem and Anthony Di Paola.
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