Episode 790: Ban on Russian crude, products would disadvantage Europe refiners, chemicals

A ban on Russian imports of oil and refined products in Europe would increase logistics costs and exclude refiners and integrated chemical producers from deeply discounted crude oil.  

-          Europe could source naphtha from other places, but at a cost

-          Europe refineries may be forced to cut rates in the short term 

-          Europe refineries, chemicals would lose access to discounted Russian products

-          Less competitive against Chinese/Indian refiners using cheap Russian product

-          Urals crude discount to Brent now $35-40/bbl compared with $1-2/bbl pre-war

-          EU ban would hurt Russia initially, less as it finds alternative markets

-          Europe relies on Russia for around 50% naphtha, gasoil imports

-          Crude oil prices up by 6% since invasion, Europe gasoil up by 35%

-          Tight market means Russian gasoil ban would have dramatic impact

-          Demand holding up well in Europe but China may be in recession 

-          Europe’s imports of Russian crude, condensate is back to pre-war levels

-          Russian crude exports are higher than pre-war, driven by China, India

-          India bought more than 350,000bbl/day Russian crude oil in April, 5X higher than January

-          China buying 10% more Russian crude oil than in 2021