European traders have been in a rush to fill tanks based in the region using Russian diesel before a ban by the European Union takes effect from February next year. The EU is banning Russian oil products by February 5.

Europe traders rush to accumulate Russian diesel

Russian diesel set to go to the Amsterdam-Rotterdam-Antwerp (ARA) storage region increased to 215,000 barrels per day (bpd) November 1-12. This was a 126% increase from October.

Russian diesel comprised 44% of the total imports in Europe for road fuel in November. This is significantly higher than the 39% in October, according to data from Refinitiv. While the dependence of Europe on Russian gas had dropped by over 50% compared to before the Russian invasion of Ukraine started. Russia remains the largest supplier of diesel in the continent.

According to Eugene Lindell, a refining and products market analyst at FGE, “the EU will have to secure around 500-600 kb/d of diesel to replace the Russian volumes, replacements will come from the US as well as east of Suez, primarily the Middle East and India.”

The Russian gas coming to ARA tanks will be used or sold quickly because of the backwardation in Ice gasoil futures. This is a scenario where the current value of gas is higher than what it will be in a few months.

EU bans entry of Russian gas in the ARA region

Starting on November 30, traders need to prove to the ICE that Russian product has not entered tanks within the ARA region. One of these regions includes Flushing and Ghent. It will still be possible for Russian gas to go to storage tanks within the ARA region in December. However, this will have to be transferred to other tanks where no delivery will have to be made, according to a report by the ICE.

Some of the market players anticipate there will be minimal effect from the move by ICE because of the low storage levels within the ARA region. The region has low storage volumes for Russian and non-Russian gas and dropping delivered volumes.

The senior analyst at oil analytics firm OilX, Neil Crosby, said that the volumes reported after expiry was notably small, adding another layer of a logistical challenge. Earlier this year, 70,000 tonnes of gas were delivered using the gasoil futures exchange in the region, as seen on the website.