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Russian Diesel Is Europe’s Latest Embargo Goal

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There are signs that this shift is already underway, with countries like France and Germany reducing their purchases of Russian diesel, Mr. Grati said. “Those countries are preparing for the divorce,” he added.

This rebalancing, which is just just starting, will almost definitely cause strains that force prices higher, analysts say. For one thing, longer distances for shipping diesel will mean that larger vessels shall be needed to bring products to Europe, and longer shipping times will add to costs.

There may be a mismatch of fuels. Russian refiners may attempt to sell diesel made for Europe to places where a better concentration of pollutants is permitted, like West Africa, analysts say, while European energy corporations might want to look harder for sufficient high-specification fuels that local regulations require.

Diesel supplies could also be squeezed in other ways. With China’s economy prone to begin heating up due to the easing of Covid-19 restrictions, refineries there and elsewhere in Asia may shift to creating jet fuel on the expense of diesel, reducing the quantity of diesel available to send to Europe.

The hindrances on Russia may mean it is just not able sell all its output. That might mean less diesel fuel in the worldwide market, further crimping supplies which have been tight for months.

“Prices of all products may have to push higher,” said Richard Bronze, head of geopolitics at Energy Facets, a research firm. “Europe goes to feel that particularly strongly.”

Already, overall Russian diesel exports have dropped sharply in recent days, said Viktor Katona, an analyst at Kpler, a firm that tracks energy shipping. Mr. Katona also said ships laden with diesel had headed from Russia to Morocco in recent weeks. Their cargo, he said, may very well be reexported to Spain or other Mediterranean destinations.

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