Kuwait plans to increase diesel exports to Europe by 5 times in 2023, according to Bloomberg. It intends to replace declining flows from Russia.
The Middle Eastern country intends to sell up to about 2.5 million tons, or 50,000 barrels per day, to Europe, a source familiar with the matter said. In addition, Kuwait hopes to double sales of jet fuel to nearly 5 million tons per day, the source said.
The European Union may face a shortage of fuel after February 5, when the embargo on oil products from Russia begins to operate. Diesel prices could rise to $200 a barrel in the first quarter of 2023, according to Bank of America.
At the end of last year, the European Union bought 1.3 million barrels a day of oil products from Russia daily, analysts at JPMorgan Chase & Co. calculated. According to them, about half of this is diesel fuel.
In recent years, Kuwait has spent tens of billions of dollars upgrading and building new oil refineries. One of the biggest factory Al Zur. it’s one of the largest oil refineries in the world, designed to process 615,000 barrels of crude oil per day. At the end of 2022, the refinery exported diesel and jet fuel for the first time.
Kuwait’s total refining capacity will rise to around 1.5 million barrels per day once Al-Zour is fully operational.
Other Middle Eastern oil producers such as Saudi Arabia and the United Arab Emirates also plan to increase fuel exports to Europe in 2023, the agency said.
On December 5, an embargo on the purchase of sea-supplied crude oil from Russia came into force in the European Union. At the same time, a price ceiling came into effect, which prohibited the purchase of Russian oil at a price below $60 per barrel. So Russia in the EU by the beginning of 2023 had only a few buyers of oil in Europe.
As a result, the cost of Russian oil, which is sold at significant discounts to benchmark Brent crude, collapsed. In December, the average price of the Russian grade Urals fell to $50.5 per barrel, the Ministry of Finance reported in operational statistics.
And according to the Argus agency, the price of Urals on Friday, January 6, fell below $40 per barrel. We are talking about a shipment from the port of Primorsk in the Baltic Sea, which cost $38.7 per barrel.