Analysts: 'The lifting of sanctions on diesel does not solve the problem, the problem is the Middle East'

The disputed lifting of sanctions on Russia decided by US President Donald Trump following an agreement with Putin will not resolve the shortage of diesel in the world and in the United States. Analysts and industry experts agree that the real crux of the diesel market problem lies in the continuation of the war in the Middle East which has reduced production in the area and emptied reserves.

The arrival of Russian fuel, we read in a report by Bloomberg analysts, could be limited to a "cooling of prices". Furthermore, Russia may not be physically able to export the fuel following Ukraine's repeated attacks on Russian infrastructure. The experts then point out that although the quantities announced by US President Trump in the agreement with Russian President Putin are respected (300,000 tonnes of diesel, another 500,000 tonnes in November and 1,000,000 tonnes immediately afterwards), "this is still a modest increase given that the United States alone consumes 3.7 million barrels of diesel per day out of a production of 5.3 million". And for the analysts at Cibc Provate Wealth "the promised barrels could help the market but also not materialize and when they arrive they could be too few and too late". “The effect on prices may be short-lived.” And according to Td Securites "there is a fear that the Russian refineries" affected by the Ukrainian attacks "will not be able to achieve the objectives" of the agreement.

Ice diesel prices in September and early October averaged $195 a barrel, more than double the level seen in January-February before the start of the war in Iran, and the growth was particularly significant even before the export ban decided by Russia in July. According to Bloomberg calculations, the recovery in exports could reduce prices by only 15%.