The accumulation of Russian diesel on ships indicates that buyers are avoiding sanctioned fuel as the abnormally warm winter reduces demand
According to Kpler Inc. there are now 1.9 million barrels of Russian diesel in floating storage - the maximum since October 2020. The increase in stocks three weeks after EU sanctions took effect suggests that some cargoes shipped from Russian ports have yet to find buyers.
Such a surplus could be a lifesaver for global markets, which have been alarmed that the flow of fuel for refueling and heating will dry up because of the sanctions. Fears of shortages prompted European refineries to increase production to prepare for a winter that was warmer than usual, and suppliers imported huge amounts of fuel in anticipation of the EU ban on Russian imports. Diesel stocks at the Amsterdam-Rotterdam-Antwerp hub reached their highest level in two years.
Of course, some of the unloading difficulties may be weather-related, resulting in some cargoes being temporarily classified as floating storage. But it appears that downtime of ships with Russian cargoes off the coast of North Africa is due to other reasons.
