Standard Chartered: Trump's Russian Diesel Won't Add New Supply
Ukraine Strikes Major Russian Oil Refinery Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.
Oil prices were mixed in Thursday's trading session, with prospects of the United States easing restrictions on Russia's crude helping ease the international benchmark while attacks on vessels in the Middle East provided support.Brent crudefor December delivery was down 0.2% to trade at $106 per barrel at 2.49 pm ET, while WTI crude for November delivery jumped 3.6% to trade at $98 per barrel.
However, commodity analysts at Standard Chartered have predicted that crude prices will remain elevated despite heightened volatility, with risks still skewed to the upside.With the U.S.
midterm elections approaching on 3 November, the political incentive to demonstrate action on elevated fuel prices is clear.
Last week, President Trumpannouncedthat Russia would immediately supply more than 300,000 tonnes of diesel to the U.S.
and international markets, followed by 500,000 tons in November; a further 1 million tons thereafter and yet another 3 million tons subject to the condition of Russian refineries.
As StanChart has noted, this marks a striking reversal in US energy diplomacy with the world’slargest diesel exporter now seeking additional fuel from one of the world’s most heavily sanctioned energy producers.
However, the energy experts are highly skeptical of Russia's ability to increase its diesel output in the near-term.
After all, Ukrainian attacks have significantly degraded Russia’s refining capacity, while domestic fuel shortages and export restrictions have already constrained its ability to supply international markets.
Moscow has repeatedly breached the energy ceasefire announced by Trump, with strikes on Ukrainian energy facilities continuing.
StanChart says that a ceasefire would be critical to Russia’s ability to restore refining capacity, and that even a sustained cessation of attacks would not immediately restore damaged processing units or normal refinery utilization.
Related: Europe’s Gas Prices Close to 2022 High as Hormuz LNG Flows Remain Limited Meanwhile, Russia must now balance additional export commitments against its domestic requirements.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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