Russia’s fuel exports seen falling sharply as buyers stay away

Russia’s exports of refined fuels are sliding fast as buyers stay away following the invasion of Ukraine, denting supplies in a market that’s already fretting over stockpiles. 

Exports of products including diesel and naphtha are down by about 520,000 barrels a day from a month earlier, consultant OilX wrote in a note to clients. Vortexa Ltd. estimates are down by about 600,000 a day, at 2.4 million barrels a day.

It’s another sign that a buyers’ strike across the oil industry is starting to affect Russian supply. Energy ministry data also showed a drop off in crude production and delivery to refineries in the second half of March. Several major European oil companies have announced a scaling back of purchases from Moscow.

While Russia is one of the world’s largest crude oil exporters, it’s also an enormous supplier of refined products, particularly to Europe. That matters because the continent’s industry-held inventories of distillates—the category including diesel—were down to about 40 days of demand at the end of last year, and prices point to an exceptionally tight market.

Countries including the U.K. and Poland have announced plans to curb their dependence on Russia since war broke out over a month ago. 

Last week, Russian refineries took a significant volume of processing capacity offline amid signs that some are filling up because of export constraints. They had about 1.13 million barrels a day of capacity offline as of March 23, an increase of about 75% from a week earlier. 

That could limit the nation’s fuel production while simultaneously increasing how much crude is available for export.