Global Diesel Prices Witness Surge

(MENAFN) The latest European Union sanctions, which prohibit the import of oil products made from Russian crude, are causing diesel prices to rise globally, according to TotalEnergies’ CEO, Patrick Pouyanne, Europe's largest oil refiner.

These new sanctions, which are part of the EU's 18th package of measures related to the Ukraine conflict, were introduced last week.

The sanctions block imports of oil products derived from Russian crude, even if they are refined outside the EU.

Additionally, the EU has lowered the price cap on Russian oil to $47.60 per barrel and has sanctioned over 100 vessels, which Brussels claims make up a “shadow fleet” that transports Russian oil in violation of existing restrictions.

In recent weeks, European diesel futures have seen a significant increase, at times reaching prices equivalent to $110 per barrel.

This surge is driven by traders seeking alternative suppliers in response to the EU’s ban. Pouyanne mentioned this during TotalEnergies' Q2 earnings call on Thursday.

“We think stronger diesel prices will become a persistent feature on the global market,” Pouyanne remarked, as quoted by a news agency.

“Diesel now comes from the Middle East or US refineries further away, which raises costs,” he added.

Pouyanne also pointed out that banning fuels made from Russian crude at foreign refineries has exacerbated supply shortages.

Additionally, the EU has imposed sanctions on India’s Vadinar refinery, which is partially owned by Russia’s Rosneft. This refinery had been a key supplier of refined Russian crude to the EU.

Pouyanne stressed that the full impact of these measures may have been underestimated by some.

“People have underestimated this news from the EU,” he said.

“There is something, for me, more structural there,” he cautioned.

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