Russian diesel exports saw their highest-volume month on record in March, despite more restrictions on Moscow’s energy supplies, according to commodities analytics firm Kpler.
Since Vladimir Putin launched his war on Ukraine, the US, Europe, and other Western nations have imposed a range of sanctions on Russia. In February, the European Union banned imports of refined Russian fuels, including diesel, after banning seaborne crude oil imports in December.
Still, Russia’s oil and diesel export volumes remain elevated amid steep discounts. In fact, crude oil shipments are back above pre-war levels thanks to China and India, and Russian diesel exports hit a record 1.27 million barrels a day in March, Kpler data shows.
But whereas crude exports have largely consolidated into a small number of large buyers, the opposite has happened for Russian diesel exports, Kpler lead oil analyst Matt Smith told Insider.
“Trade flows [for diesel] have sprung up into many North African countries, while other key exporters such as Turkey and Saudi Arabia have increasingly imported Russian diesel in recent months given advantageous pricing,” he said.
‘It’s a game of musical chairs’
Smith noted that some nations, like India and China, have been ramping up imports of Russian supplies only to resell them. Overall, Russian diesel is displacing traditional suppliers as trade flows change to make up for the loss of exports to the European market, he added.
“It’s a game of musical chairs, and one we’ve seen play out already with other Russian products such as fuel oil,” the analyst said.
Brazil, for example, imported effectively zero Russian diesel all the way up to the end of 2022, with most of its supplies coming from the US and other sellers, according to Kpler data shared with Insider.
The US sent roughly 150,000 barrels a day of diesel to Brazil in December 2022, but that has dropped by about 50% in April.
Brazil’s diesel imports from Russia, meanwhile, surged to almost 100,000 barrels a day this month — even though the US is a much closer trade partner than Russia — suggesting Brazil is able to get cheaper supplies despite the longer distance.
Smith said Kpler isn’t privy to the pricing involved, but the data illustrate that the economics work for both Russia and Brazil.
“If it was just the odd cargo it could be suggested that Brazil is the destination of last resort when Russia is unable to sell its diesel to anyone else, but the volumes delivered in the last three months suggest something more regular and more of a trend,” the analyst said. “It really does appear that Russian diesel is muscling in on US market share in Brazil.”
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