New sanctions on Russia lend at least temporary strength to global diesel market

15 January 2025 Time to read:  minutes

Commentary summary:

  • Whilst USGC TA diesel arbs remain closed (with discussion of reverse TA arbs in the market) Middle Eastern diesel arbs still point East; margins West have however, improved.
  • The GO and Jet E/Ws widen dramatically whilst the HOGO continues to widen. Europe will need to pull its extra diesel from Asia not the US.
  • US sanctions on Russia’s oil industry this week should primarily impact crude but could have knock-on impacts on global refining and directly via Russian gasoil supply.
  • A weak jet market may also have a marginal impact on gasoil cracks ahead.

As discussed in last week’s commentary “However, until Chinese diesel exports return in meaningful volumes, Singapore cracks and spreads are likely to retain their bullish trajectory.” Singapore’s diesel market continues to show real strength, with spreads, premiums, and slightly less so, cracks, advancing steadily over the past week. This momentum has been amplified by the announcement of stricter US sanctions targeting primarily Russian crude-carrying vessels.

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James Noel-Beswick is Commodity Owner for Sparta. Before joining Sparta, James worked as an analyst for likes of BP and Shell and leads our continued development of the distillate product vertical.

 

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