The diesel market is barely reacting to a potentially enormous supply-cut, suggesting a degree of skepticism from traders about how serious the impact will be.
(Bloomberg) — The diesel market is barely reacting to a potentially enormous supply-cut, suggesting a degree of skepticism from traders about how serious the impact will be.
The temporary restrictions that were imposed last week — which also apply to gasoline — should remove millions of barrels from the global market at a stroke. Such a large cut could significantly tighten an already strained supply picture, yet benchmark diesel futures in Europe have seen relatively modest moves.
See also: Russia’s Diesel Exports Ban Is Risky for Moscow and World Alike
In northwest Europe, the premium of ICE Gasoil futures to Brent — a key market metric known as the crack — is now around $33 a barrel. That’s roughly where it was before news of the ban emerged on Thursday.
Analysts have suggested that the ban will be relatively short-lived, possibly dampening concerns about supply impact.
It’s also not a blanket export halt. The government decree included exemptions, and Russia has made amendments to exclude bunker fuel, gasoils and some middle distillates from the ban.
Under the original restrictions, shipments which already had loading papers could still be exported.
See also: Tanker Loads Diesel at Russia’s Primorsk After Export Ban
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