The embargo on Russian oil products has created an oversupply of diesel in Asia

Asian importers of Russian oil and products obviously overdid it, buying too much raw material in the hope of transiting it after re-registration to Europe, which needs fuel after the embargo was introduced. However, Brussels declared 2023 not so much the time of sanctions, but the era of the struggle against bypassing already imposed restrictions. Therefore, despite the internal deficit, problems and crisis, the West is trying not to take oil products from Asia, assuming that the regional market is pumped to capacity with Russian oil products.

Diesel inventories in Asia have increased excessively since the EU ban on Russian diesel imports came into effect on February 5. Now Asian refineries and exporters have to compete additionally with Russia for diesel sales to Africa, where Moscow has also reached with its products, Reuters reports, citing traders.



On the eve of the EU ban on Russian oil products, the Russian Federation began to redirect its cargoes to North Africa and Asia. At the same time, Europe began to buy more diesel and other fuels from the Middle East and North America to replace lost Russian supplies.

Reuters estimates that weekly diesel inventories at the Singapore hub reached their highest level in more than a year last week as Russia sells more diesel to Africa, replacing supplies through the Suez Canal.

Asia's diesel glut will last no more than a few months, analysts predict, as demand is expected to surge in the second half of the year. If this forecast does not come true, and the recession resumes, then the market, both in Asia and Europe, will collapse and become completely confused, with shortages rampant in one part of the world, and an oversupply that is difficult to realize in another.

Experts and industry specialists are trying to solve the looming problem. The thing is that in March, the shipment of diesel fuel in Russia increased by another 400 barrels per day compared to February, reaching a very high level of 1,5 million barrels per day (Vortexa data). In other words, the Russian Federation floods the region very intensively. So far, this situation is tolerated solely because of the expectation of a revival of demand in China in the second half of the year. But the excitement is already overwhelmed by both traders and local authorities.