Under the sanctions imposed by the invasion of Ukraine
European Union member states will stop buying diesel from Russia from this Sunday under sanctions imposed on the country led by Vladimir Putin for its invasion of Ukraine, although the government has assured supplies. Another thing is how it will affect the price of fuel, which will depend on the balance between supply and demand and the international price.
Sources from the Spanish Association of Petroleum Product Operators (AOP) acknowledge that “many analysts” point out that the absence of Russian diesel “will mean an increase in the international price of diesel” because the country is one of the main exporters of crude oil and already refined diesel. In addition, there are “many countries” that rely heavily on Russian diesel. The recovery in demand from China after the lifting of measures and restrictions related to Covid-19 will also have an impact, and a lot. However, this demand pressure from China may be offset by the slowdown in other countries, which is reducing diesel purchases.
“There are many factors and therefore it cannot be said that from February 5 the price of diesel will rise that much. It will be necessary to see how all these factors are balanced,” sources of the AOP have appreciated.
One of the aspects they affect is that supplies are guaranteed in Spain because between 2008 and 2012 about 7,000 million euros were invested in the country in national refineries to make them “more flexible and competitive”, which it did in the not occur in the rest of Europe, says EP.
The ministry for the ecological transition and the demographic challenge also emphasizes that Spain has “good diversification of imported crude oil”. “Spanish refineries, unlike many European ones, have made significant investments to cope with situations such as the current one and are prepared to process different types of crude oil and origin, with the capacity to process crude oil different from those of Russia.” . There are 42 days of strategic reserves owned by Cores (Corporación de Reservas Estratégicas de Productos Petrolíferos) with direct control of the administration and other safety reserves in the industry,” they added.
Spain has had a net export balance of petrol and diesel for ten years, so the sanctions on imports of crude oil and oil products from Russia should in themselves “not pose any problem for supply”. However, you may “experience high international prices”.
According to data from the European Union Oil Bulletin, diesel prices in Spain have risen 1% over the past week over the previous seven days to 1.7 euros per litre. In addition, since the beginning of the year, the average diesel price in Spain has increased by 2.6% and filling an average 50 liter tank with this fuel is 14 euros more expensive than a year ago, which is 20% more.
The latest full annual data from Cores on diesel imports into Spain corresponds to 2021, the year when Russia was the third largest supplier of diesel with a total of 771,000 tonnes, 9.1% of total imports.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
