In terms of oil products, the focus in 2023 will remain on middle distillates with jet fuel recovery a wildcard, Trend reports with reference to Oxford Institute for Energy Studies (OIES).
"Although jet fuel demand at the end of 2022 was only marginally improved from a year ago, estimated at around 20 per cent below pre-pandemic levels, we expect to see the recovery accelerating in 2023 even as the airline industry continues to face bottlenecks. Europe continues to rely heavily on Russian diesel imports (which accounted for an average of 45 per cent of the total in 2022). The upcoming embargo on imports of Russian products in February 2023 will force Europe to source supplies from other regions to substitute for nearly 500,000 b/d of Russian diesel import losses," reads the latest OIES report.
OIES analysts note that even the economic recession is unlikely to resolve the diesel supply deficit in Europe, while commercial stocks remain well below their five-year average.
"On the supply side, Russia will remain center stage in 2023 as the EU embargo on Russian crude and oil products takes full effect. In 2022, Russia redirected sanctioned crude particularly to India, China, and Turkey, allowing its domestic oil production to remain close to pre-war levels. But with the EU embargo on crude and products exports in full force this could change. The full impact of the EU embargo and the price cap on Russia’s production and exports will not be fully understood at least until the end of Q1 2023 when the embargo on Russian products comes into effect on February 5."
In June 2022, the Council adopted a sixth package of sanctions that, among others, prohibits the purchase, import or transfer of seaborne crude oil and certain petroleum products from Russia to the EU. The restrictions apply from 5 December 2022 for crude oil and from 5 February 2023 for other refined petroleum products.
A temporary exception is foreseen for imports of crude oil by pipeline into those EU member states that, due to their geographic situation, suffer from a specific dependence on Russian supplies and have no viable alternative options.
Moreover, Bulgaria and Croatia specifically will benefit from temporary derogations concerning the import of Russian seaborne crude oil and vacuum gas oil respectively.
As the majority of the Russian oil delivered to the EU is seaborne, these restrictions will cover nearly 90 percent of Russian oil imports to Europe by the end of 2022.