The embargo on Russian diesel will have little effect at the pump

This is the second stage of the rocket: after targeting crude oil, from December 5, the European embargo on Russian oil will be extended, this Sunday, February 5, to refined products. They can no longer be imported by sea. This two-month lag made it possible to take into account the contracts that bind players in the sector, with, for certain oil derivatives, a term set at the end of the calendar year.

This part of an embargo decreed in reaction to the continuation of the war in Ukraine concerns all refined products: gasoline, diesel, propane, butane, heating oil, raw materials for petrochemicals, etc. “However, France has so far only imported large quantities from Russia as a derivative, diesel, slips Olivier Gantois, president of the French Union of Petroleum Industries (Ufip). For us, road transport (light vehicles, utility vehicles, heavy goods vehicles) is the most concerned. »

Before the conflict, France imported 30% of its diesel from Russia – and Europe, 50%. Should we therefore fear a shortage? Absolutely not, reassures Olivier Gantois: “The embargo on crude went like a letter in the mail because refiners had time to postpone their imports to other areas, such as North America and the Middle East. . »

In his eyes, the same will apply to the ban on importing diesel. “The major oil companies (Total, Shell, BP, Esso, Eni) and even large retailers buy more diesel from those who, among their usual suppliers, have excess production capacity: Middle East, North America, but also in India,” he says.

In addition, notes Olivier Appert, advisor to the Energy & Climate Center of the French Institute for International Relations (Ifri), “France, like the other members of the International Energy Agency (IEA), is required to have , in its refineries and depots, of diesel stocks corresponding to 90 days of net imports of the previous year”. Except to imagine, as this expert fears, “a blocking of refineries by opponents of the pension reform”, the availability of diesel seems guaranteed.

But what about prices at petrol stations? “Shipping diesel over a greater distance will drive up costs,” notes Patrice Geoffron, director of the Center for Geopolitics of Energy and Raw Materials at Paris-Dauphine. However, anticipating an oil shock would probably be excessive, because the price at the pump is already very high. »

In fact, diesel, the price of which in January 2020 was €1.31 per liter on average, is now flirting with €2 (€1.94 as of January 30, 2023, i.e. 3 cents more than petrol ). The end of the fuel discount (up to 30 cents per litre), replaced at the beginning of the year by a fuel check targeting the most modest assets, does not explain everything. “Even before the embargo, the markets have already anticipated tensions on diesel,” observes Olivier Gantois.

The president of Ufip expects prices at the pump to be maintained “at a high level”. Jean-Louis Schilansky, oil expert and ex-boss of this same organization, goes a little further. He estimates that “the price of diesel could continue to increase faster than that of gasoline”. Which, in his eyes, “could divert a growing number of motorists, who are already sensitive to environmental issues, from diesel” (1).

“The evolution of diesel prices will also depend on other factors”, analyzes Lionel Ragot, professor of economics at the University of Paris-Nanterre. And this member of the Center for Prospective Studies and International Information (Cepii) quotes “the future attitude of the OPEC countries, hitherto reluctant to increase production, as well as the evolution of the ‘Mondial economy “. “The slowdown in growth has lowered the price of crude,” he says. After having repeatedly exceeded 120 dollars (110 €) during 2022, a barrel of Brent is now trading at 82 dollars (75 €).

“In the event of a recovery, particularly in China, where the containment measures have been lifted, we must expect greater demand for oil and an increase in its price”, advances Lionel Ragot. But, underlines Patrice Geoffron, the situation remains “fragile”. In his eyes, “we could just as easily observe a drop in the price of a barrel, which would pull down that of fuels”.

---

Source

---