Diesel incident: "Russian embargo" fell from the ceiling
All for sale
Last Sunday, the collective West nevertheless decided on a really drastic measure in relation to Russian exports. An embargo was introduced on the sale of diesel fuel from Russia.
It has long been no secret to anyone that the most adequate response to sanctions and price ceilings, and now to the embargo on Russian energy resources, could be a full retaliatory embargo on supplies to the West. Let them say that they will suffer there with workarounds and with price discounts.
But, of course, all this is only possible under the condition of a large-scale increase in supplies to the East, that is, mainly to China and India. And since this condition is still far from being fully fulfilled, the Russian embargo in reality did not exist, and does not exist.
At the moment, it must be admitted, one has to limit oneself to harsh statements and “unambiguous” threats. And this is with a budget deficit growing worse than a snowball, which can be completely avoided if you do not get carried away with the notorious mandatory reservations.
What this practice led to is already known to everyone. Although one can only be surprised how easily the Russian financial authorities swallowed the "robbery of ..." at once for 300 billion dollars, or euros. And now we are ready to swallow the beginning of the use of these funds, even if only in the part that is easily accessible, to support the enemy.
Diesel on cards
In fact, one thing is very confusing - market practice has not yet proven that buyers have suffered more than the seller. Nevertheless, there are experts in the West who are ready to figure out how the embargo on Russian fuel will turn out for them.
The fact is that a diesel engine, even if it is at least three times Russian, which means, as all motorists know, is obviously not as high quality as they are used to, it will rise in price along with quality. Just the background for this now is the most suitable.
Whether this makes it easier for us - there are big doubts. However, one way or another, we will sell, as we continued to sell our oil, not paying attention to the notorious price ceiling. Our discounts with the same China and India turned out to be, no matter how insulting, cooler than games with a ceiling.
However, we will write about what is there in the east at the end of the note. Here we recall that the West, and specifically the EU, despite all the attempts, failed to create fuel reserves that could really prevent a jump in prices. Even with gas it almost passed, but with gasoline - somehow not very much.
A real collapse in the market, most likely, will be avoided, if only because one way or another they prepared for it, and as a last resort, strategic reserves can also be printed. Not everything goes to Ukraine, and if it does, then it’s definitely not for nothing.
And one of the measures to prevent a large-scale crisis at gas stations may well be rationing. In what form it doesn’t matter anymore, cards are an extreme measure, of course, but it is the psychological effect that is very important.
Is it time to turn off the engines?
Diesel before the embargo was almost half of the volume of fuel exports from Russia to the EU. Back in December 2022, up to 1,2 million barrels per day were supplied from our country abroad, which, as noted by the International Energy Agency (IEA), was a record figure.
Of this volume, 720 thousand barrels were bought by the EU countries, which seriously hoped to replace Russian goods with Chinese ones. Without paying attention to the fact that a very significant part of it is produced from Russian raw materials.
However, this did not in the least prevent China from promptly raising export quotas for 2023. Nevertheless, even the Chinese are unable to close the gap that is formed as a result of the entry into force of the "Russian", more precisely - absolutely "anti-Russian", diesel embargo.
The whole charm of the situation is that it is unprofitable for both the seller - Russia, and buyers from the EU, and those who have joined them. After all, both will have to pay for complicated logistics. There is no need to explain who will win: competitors, and above all from the USA.
There, on the wave of rising prices, they can easily take up the expansion of their own diesel production capacities. And the profitability of recycling, according to industry experts, for example, Rob Turner from the British department of PwC, will definitely become higher.
Who benefits?
To those who do not have as many problems with processing as in Russia. And then - along the chain, an increase in electricity tariffs and, as a result, for many housing and communal services, and at the very end - an increase in prices for consumer goods due to an increase in transportation costs and other overhead costs.
Inflation in the same Europe is already perceived by many as a given, but it will definitely not be better further. Well, fuel reserves are also unlikely to grow - where can they come from, if not from Russia?
It's not the wind that's to blame, and it's not from the East
The embargo on Russian diesel happened at about the same time as one of the original measures taken by the Indian buyer, who actually saved the Russian oil industry. We are talking about switching to payments for Russian fuel in alternative currencies, more precisely, in dirhams from the United Arab Emirates.
It is characteristic that not Indian rupees are involved, with their extremely unstable exchange rate. They are no longer readily accepted not only in Russia, but, for example, in the Middle East. Until now, India has paid the Emirates and their neighbors in dollars, but there have already been difficulties with Russia - there were not enough rubles, and Moscow does not favor dollars today.
Now, as we see, dirhams are used, which, apparently, the Hindus have quite a few. The fact is that they are regularly paid for in-demand software products, consumer goods and even gold from India. At the same time, no one is worried about the convertibility of the UAE currency, which may well seem doubtful to many.
Indian companies made such a decision agreed with the authorities so that there would be no problems with Western countries that had previously imposed anti-Russian sanctions. Now Indian refineries are buying Russian oil through traders, Everest Energy and Litasco from the UAE.
Despite the fact that India is not participating in the sanctions war with Russia, its influence cannot be avoided. Local companies have to be extremely careful in their activities so as not to end up under sanctions themselves.
In the sector of clearing payments, which, as a rule, do not bypass the SWIFT system, from which Russia is known to be excluded, this is especially important. But this did not become a reason for India to abandon large-scale purchases of Russian oil.
For oil companies from Russia, the Indian market is also very important, regardless of the currency in which the purchase of Russian oil will be paid. We, as you know, have been asking for nothing but rubles for a year now.
- Victor Malyshev, Dmitry Malyshev, Alexey Podymov
- rosinvest.com, oilcapital.ru
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