- In a bid to find alternative markets as E.U. sanctions tighten, Russia may try to push greater volumes of a key oil product into Asia, possibly blending some with crude oil.
- More Russian-made naphtha is likely to head into hubs such as Singapore and Fujairah from February when E.U. sanctions kick in, where it can be stored for when demand should pick up.
As winter approaches in Europe, the continent is unfortunately caught in a situation where it has had to cut off its nose to spite its face.
With the Russian invasion of Ukraine showing no sign of ending, roiling energy markets for the most part of this year and threatening to spill over into 2023, the European Union, in solidarity with the U.S., continues to sanction Russian energy exports, despite its desperate need for them.
This December, a European Union ban on most flows of Russian crude will start, followed by a similar move against products including naphtha – a fuel primarily used to make plastics, about two months later.
In a bid to find alternative markets as E.U. sanctions tighten, Russia may try to push greater volumes of a key oil product into Asia, possibly blending some with crude oil.
According to preliminary data by Vortexa, Russian naphtha exports to Asia rose 84% to about 130,000 barrels in the first three weeks of August, compared with all of July.
That increase came despite weak regional conditions as local plastic makers, key consumers of oil byproducts, struggle with thin margins and poor plastics demand from China, where an economic slowdown because of a property crisis and zero-Covid lockdowns is biting.
More Russian-made naphtha is likely to head into hubs such as Singapore and Fujairah from February when E.U. sanctions kick in, where it can be stored for when demand should pick up.
Russian naphtha may already have been blended into the country’s Urals crude and shipped to India earlier this year, as New Delhi declined to participate in western sanctions.
