EU Ban on Refined Oil Products from Russia Set to Disrupt Markets

The European Union is about to impose a ban on imports of refined oil products from Russia on February 5th.[0] This ban could be much more disruptive than its earlier halt to crude purchases.[0] To soften the blow, the EU is considering a price cap of $100 per barrel on Russian diesel, though this is still lower than the cap on Russian crude oil, which is set at $60 per barrel.[1] Tanker-tracking data show that Europe sourced more than a quarter of its diesel imports from Russia weeks ahead of the ban.[2]

Tom Kloza, global head of energy analysis at the Oil Price Information Service, says diesel prices may remain firm on both sides of the Atlantic, and may fetch $50 to $60 a barrel above crude costs.[3] Futures prices for New York Harbor ultra-low sulfur diesel traded on the New York Mercantile Exchange settled at $3.3613 a gallon on Jan. 25.[2] At a rate of 42 gallons per barrel, the cost would amount to approximately $141.[3] The West Texas Intermediate crude futures market is trading at a price point above $80 per barrel.[3]

The ban is “great news” to North American refiners, and European refiners are much better off than they were before because natural-gas prices are about a fifth of what they were in late August, he says.[3] On February 2, the Phillips 66 Bayway Refinery saw a start of a significant transformation and the European Union embargoed the refinery five days later. Coincidentally, temperatures across most of the United States experienced a drop to below-normal levels at the same time.[2]

Hédi Grati, executive director, refining & marketing at S&P Global Commodity Insights, notes that product markets are more fragmented than crude oil, the parcel sizes are smaller, and the shipping side of things is likely to be a greater bottleneck.[2] Europe has fewer replacement options for diesel than for crude, and Russia is a major exporter of diesel.[3]

Grati added that ‘from Russia’s perspective, the capping of oil products will be more painful than the one in crude oil, since oil producers did not have real problems finding either vessels or buyers to transport and import Russian crude.[4] Despite the discount on Russian crude and the narrowing of profit margins, increasing the export of crude to make up for the products is an option.[4]

0. “Europe’s Ban on Russia Oil Products Will Be More Disruptive” Bloomberg, 25 Jan. 2023,

1. “EU is mulling a price cap on Russian refined products rather than a ban” ForexLive, 26 Jan. 2023,

2. “The EU’s latest embargo on Russia will keep diesel prices high” MarketWatch, 26 Jan. 2023,

3. “The EU’s latest embargo on Russia will keep diesel prices high” Morningstar, 26 Jan. 2023,

4. “Product Tanker Market: 220 Million Barrels of Diesel Type Products Imported to the EU from Russia Will Be Sourced …” Hellenic Shipping News Worldwide, 23 Jan. 2023,