This is the second stage of the rocket: after targeting crude oil, from December 5, the European embargo on Russian oil will be extended, this Sunday, February 5, to refined products. They can no longer be imported by sea. A two-month lag planned for June, when the sanction was announced. Objective: to take into account the contracts that bind players in the sector, with, for certain oil derivatives, a term set at the end of the calendar year.
This part of an embargo decreed in reaction to the continuation of the war in Ukraine concerns all refined products: gasoline, diesel, propane, butane, heating oil, raw materials for petrochemicals, etc. “However, until now, France has imported in large quantities from Russia only a derivative, diesel fuel, slides Olivier Gantois, president of the French Union of Petroleum Industries (Ufip). For us, road transport (light vehicles, utility vehicles, heavy goods vehicles) is the most concerned. »
“The embargo on crude has passed like a letter in the mail”
Before the conflict, France imported 30% of its diesel from Russia – and Europe, 50%. Should we therefore fear a shortage? Absolutely not, reassures Olivier Gantois: “The crude embargo went like a letter in the mail because refiners had time to shift their imports to other areas, such as North America and the Middle East. »
In his eyes, the same will apply to the ban on importing diesel. “The major oil companies (Total, Shell, BP, Esso, Eni) and even large retailers buy more diesel from those who, among their usual suppliers, have excess production capacity: Middle East, North America, but also in India”, he points out.
Guaranteed availability except in the event of refinery blockages
In addition, notes Olivier Appert, advisor to the Energy & Climate Center of the French Institute of International Relations (Ifri), “France, like the other members of the International Energy Agency (AIE)is required to have, in its refineries and depots, gas oil stocks corresponding to 90 days of the net imports of the previous year.. Unless we imagine, as this expert fears, “blocking of refineries by opponents of pension reform”, the availability of diesel seems guaranteed.
But what about prices at petrol stations? “Shipping diesel over a greater distance will drive up costs, notes Patrice Geoffron, director of the Center for Geopolitics of Energy and Raw Materials at Paris-Dauphine. However, anticipating an oil shock would probably be excessive, because the price at the pump is already very high. »
Diesel flirts with €2 per liter
In fact, diesel, the price of which in January 2020 was €1.31 per liter on average, is now flirting with €2 (€1.94 as of January 30, 2023, i.e. 3 cents more than petrol ). The end of the fuel discount (up to 30 cents per litre), replaced at the beginning of the year by a fuel check targeting the most modest assets, does not explain everything. “Even before the embargo, the markets had already anticipated tensions on diesel,” observes Olivier Gantois.
The president of Ufip expects prices to be maintained at the pump “at a high level”. Jean-Louis Schilansky, oil expert and ex-boss of this same organization, goes a little further. He estimates that “The price of diesel could continue to increase faster than that of gasoline”. which, in his view, “could divert a growing number of motorists, who are already sensitive to environmental issues, from diesel” (1).
The effects of a possible Chinese takeover
“The development of diesel prices will also depend on other factors”, analyzes Lionel Ragot, professor of economics at the University of Paris-Nanterre. And this member of the Center for Prospective Studies and International Information (Cepii) to quote “the future attitude of the OPEC countries, hitherto reluctant to increase production, as well as the evolution of the world economy”. “The slowdown in growth has lowered the price of crude”, he points out. After having repeatedly exceeded 120 dollars (110 €) during 2022, a barrel of Brent is now trading at 82 dollars (75 €).
“In the event of a recovery, particularly in China, where containment measures have been lifted, we can expect greater demand for oil and an increase in its price”, advances Lionel Ragot. But, underlines Patrice Geoffron, the situation remains « fragile ». To his eyes“we could just as easily see a fall in the price of a barrel, which would pull down that of fuels”.
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Price caps for purchases by third countries
In addition to the European embargo on crude oil and refined products from Russia, the European Union has come to an agreement with its G7 allies (United States, Great Britain, Canada, Japan), as well as the Australia, to limit to 60 dollars (54.7 €) the purchase price by third countries of a barrel of Russian oil. For this, their trading companies, their shipowners and especially their insurers (EU and UK companies largely dominate this market) cannot serve contracts negotiated at a higher rate.
The bet is that no tanker will take the risk of transporting a cargo that is not duly insured. Following the same system, the EU and the G7 are also preparing to limit the price of refined products. The European Commission has just proposed a cap of 100 dollars (91 €) for diesel.