The volumes of Russian diesel in floating storage at sea have jumped this month to the highest levels since at least 2017, according to data from analytics firm Kpler compiled by Bloomberg.
In the 10 days to March 17, as many as 6.2 million barrels of Russian diesel had been stored on tankers at sea, per Kpler data. This is the highest level of diesel in floating storage in years and exceeds the levels from early 2023, when the EU banned seaborne imports of diesel and other fuels from Russia. This month’s glut is also much higher than in the spring and summer of 2020, when the pandemic hit global fuel demand, according to Bloomberg’s estimates.
The volumes of diesel in floating storage are high by historical standards and it’s not immediately clear what caused the rise in diesel stockpiles on tankers. One plausible reason could be the stricter enforcement of U.S. sanctions on Russia’s oil exports, Bloomberg suggests.
Last month, the U.S. imposed new sanctions against Russia, on the second anniversary of the Russian invasion of Ukraine and in response to the death of opposition politician and anticorruption activist Alexey Navalny.
Among the 500 targets of the new sanctions, the U.S. Treasury and State are targeting Russia’s tanker operator Sovcomflot and more than a dozen crude oil tankers linked to the Russian state-owned firm, as well as middlemen and companies acting as such.
The tightened sanctions may have spooked prospective buyers of Russia’s diesel, just as India is reportedly refusing to take delivery of Russian crude oil carried on vessels owned by Sovcomflot or any of its affiliates.
What’s certainly not causing the glut is the reduced refining capacity in Russia, where drones from Ukraine have hit several oil refineries in western and southwestern Russia in recent weeks, causing damages.
Commodity trading major Gunvor estimates that the attacks have taken out as much as 600,000 barrels per day (bpd) of Russia’s processing capacity.
By Charles Kennedy for Oilprice.com
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