(Bloomberg) -- With the northern hemisphere winter approaching and global diesel markets already tight, Russia has banned exports of the fuel that’s used for transportation, heating and industrial processes. Many analysts expect the halt to be temporary, but others see it as another example of Moscow weaponizing energy exports, as its invasion of Ukraine enters a 20th month. Most Read from BloombergChina’s Ultra-Rich Gen Zs Flock Home as Global Tensions RiseAI Fantasy Fades as Wall Street Reels
The restriction includes all types of diesel, including summer, winter and Arctic blends, as well as heavy distillates including gasoils, according to the government decree. It came into effect on Sept. 21, but doesn’t have a final date.
Russian barrels sent to Saudi Arabia and Turkey freed up diesel produced in those countries’ own refineries. That’s now being exported to Russia’s former buyers in Europe. It’s not an efficient trade, but it makes sure everybody still gets the fuel they need. Halting Russian supplies to these “friendly” states risks eventually impacting the “unfriendly” ones in the west through higher prices and curtailed exports from countries like Turkey and Saudi Arabia.
In contrast, supplies of the fuel have been cut by normal seasonal maintenance at Russian refineries. In the first half of this month, daily refinery runs averaged 5.44 million barrels, about 108,000 barrels a day down from the average for most of August, calculations by Bloomberg show. It’s not the first time that the Russian government has used tough measures to reign in domestic fuel producers. In 2018, the then-Deputy Prime Minister Dmitry Kozak threatened to introduce a high export duty for crude oil and petroleum products if domestic fuel demand wasn’t met.
Details of the supplies are classified; however, the amount needed for military needs in six Russian regions bordering Ukraine, as well as the annexed Donetsk and Luhansk regions, reached about 220,000 tons in September 2022 alone, according to data seen by Bloomberg.
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