Oil Price.com | Oct. 18, 2022
Crude oil imports into Asia jumped in September. Normally such news would spark hope for demand and, consequently, prices, but this time it’s more complicated. And it has less to do with Asian demand than demand in Europe.Oil imports in Asia rose by more than 2 million barrels daily last month, Reuters’ Clyde Russell reported in his latest column, noting that the bulk went to China and Singapore.
He then went on to point out that both China and Singapore had gone through refinery maintenance in August and utilization rates were up in September. On the one hand, it’s the normal preparation for winter. On the other, the EU has an embargo on Russian crude coming into effect in less than two months and then an embargo on fuels two months after that.
Europe is already grappling with a diesel shortage as it shuns Russian fuels ahead of the embargo and as the global supply of the fuel remains limited. This has contributed to fears of demand destruction by excessive prices, but it has also reinforced fears of a recession due to the fuel crunch.
The U.S. could maybe increase its fuel shipments to Europe, according to executives from major commodity trading houses quoted in a recent report by Energy Intelligence, especially since Russian fuels will be rerouted to other destinations, including Asia and South America, satisfying some of the demand there. And some of these Russian fuels will go to Europe but come from China.
It is a somewhat ironic twist in the Europe-Russia story that Russian oil will not literally stop flowing into Europe, whatever Europe does to stop that flow, even if it is willing to pay a steep price for it. As already evidenced by fuel flows from India to Europe, the latter has no problem with Russian refined products as long as they don’t come from Russia itself.
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