The North African states have become the most “insatiable” buyers of Russian diesel fuel and other petroleum products after Europe placed an embargo on these goods in early February 2023. In this respect informs Wall Street Magazine.
According to the newspaper, Moscow had to redirect its export flows after the introduction of the EU ban (it accounted for 60% of oil exports). This is of concern in the West as it neutralizes efforts to reduce Russia’s budget revenues from hydrocarbon sales.
In January 2023, Morocco bought more than 2 million barrels of Russian diesel fuel (there were only 600 thousand barrels for the whole of 2021). Another minimum of 1.2 million barrels is expected in February. Similar increases in purchases from Russia are also seen in Algeria and Egypt.
Tunisia, which used to buy almost no Russian petroleum products, now actively buys diesel, kerosene, gasoline, naphtha, all of which are used in the chemical industry, especially in the production of plastics. In January Tunisia bought 2.8 million barrels from Russia and is expected to deliver 3.1 million barrels in February.
The increase in imports of petroleum products from Russia to Morocco and Tunisia coincided with the sharp increase in exports from these countries. The WSJ does not exclude that countries re-export – they mix Russian fuel with petroleum products from other countries and resell them (“Latvian plan”).
Limiting such trading schemes is unrealistic, according to Andreas Economow of the Oxford Energy Research Institute.
“Even if you wanted to edit, how would you do it? If the cargo consists of 51% Moroccan and 49% Russian products, how should the origin be considered? — said the expert.
Kpler Senior Petroleum Analyst Victor Katona noted that imports of petroleum products to North African countries are too large for these countries to process on their own. And he admits that some of the Russian goods may eventually be sold to the same Europe. “Believe me, we don’t see any increase in refinery capacity in the Maghreb,” said Katona, referring to the African region that includes Tunisia, Algeria and Morocco.
At the same time, the WSJ clarifies that the known shipments from North African countries took place before February 5, when EU sanctions against Russian petroleum products came into effect and there was no legal prohibition on re-exporting. At the same time, the publication emphasizes that such trends cause “headaches” for European officials and undermine the West’s goals to deprive Moscow of revenue while conducting a special operation in Ukraine.
According to the newspaper’s report, Morocco, which did not export petroleum products before, sent 280 thousand barrels of diesel oil to the Canary Islands and 270 thousand barrels to Turkey in January alone. Although the exact origin of the cargo cannot be determined, this export coincided with the purchase of Russian goods.
The WSJ explains that under the current conditions for Russia, the ports of North Africa are an ideal transit point. They are located in relatively close proximity, the delivery of oil products there does not take much longer than before sending a tanker to Europe via the Baltic Sea. Therefore, Moscow manages to avoid high shipping costs.
In addition, China and India are more interested in Russian crude oil than refined products. The proximity of Morocco, Tunisia and Algeria to Europe theoretically enables Russia to communicate with European end customers at relatively low cost.
Analysts interviewed by the newspaper are hesitant to estimate how long re-exports via North Africa could take, as the February imposition of a ceiling on Russian oil products will clearly make it difficult for these goods to move around the world. According to experts, the key factor here will be the European countries themselves: how strictly they will follow their own rules in search of an alternative to supplies lost from Russia.
“I don’t think Westerners are that concerned about the origin of these petroleum products. It is beneficial for them that the flows from Russia do not stop. I don’t think they will ask where these goods come from when market conditions are so difficult.”
— Summed up Economow from Oxford.
WSJ publication released two days after Bloomberg reported that after the ceiling on oil prices, Russian companies earned much more from their sale than previously thought.
In particular, citing a study by a group of experts from the Institute of International Finance, Columbia and Universities of California, the agency wrote that on December 5, the average cost of Russian crude oil in a month after the ceiling was introduced was $74. per barrel. That’s almost a quarter over the $60-per-barrel threshold set by the European Union and the G7.
The authors of the study noted that some of the oil exported from Russia was transported by so-called “shadow fleet” tankers, a group of at least 250 ships that Moscow had prepared before entry, according to Western media. from the price ceiling. And so this oil went beyond the price limit set by the G7 and the EU.