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On October 19th, according to the Financial Times, US Ambassador to the EU Andrew Puzder warned that Washington could take "devastating" retaliatory measures against European companies if the EU continues to push forward with its plans to restrict US competitors access to parts of the European market. This year, the European Commission proposed reserving some spectrum resources available for direct satellite connections to smartphones for European companies. This would restrict frequencies available to non-EU operators, including US companies. When asked if European companies should worry about retaliation, Puzder said that given the size of the US market, European companies "should be wary of this happening, because it would be a very serious blow to these companies." Puzder acknowledged that Europe has the right to protect sensitive government information, but warned against legislating in favor of domestic companies and suppressing US competitors. Puzder said, "If the goal is to weaken US competitiveness, I dont think thats the right goal of this kind of legislation. Making US companies less competitive will not make European companies more competitive."Yemeni sources say the Houthi rebels fired five missiles at Marib, three of which landed inside the “Sahern King” military camp.Ukrainian President Zelensky: We continue to put pressure on Russian forces on the front lines.Yemeni sources say dozens of Yemeni government forces and Houthi rebels have been killed or wounded in clashes and airstrikes in Taiz and Lahj.Saudi Civil Defense: An enemy projectile landed in Najran, injuring six Saudi citizens and damaging three houses and three vehicles.

As EU sanctions worsen, Russia may increase supplies of petroleum to Asia

Haiden Holmes

Aug 24, 2022 10:45

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According to FGE, if European sanctions strengthen, Russia may increase exports of a critical oil product into Asia, maybe by blending it with crude oil, in an effort to find alternative markets.


Armaan Ashraf, the global head of natural gas liquids at the consultancy, expects that in February, when EU sanctions take effect, more naphtha, a fuel used mostly in the production of plastics, will relocate to hubs such as Singapore and Fujairah. In an interview, he suggested that as importers shy away from direct purchases from Russia, re-exports from these areas may become more widespread.


Russia's invasion of Ukraine has created havoc on the energy markets this year, and this disruption is anticipated to persist until 2023. In December, the European Union put a restriction on the majority of Russian crude exports, followed approximately two months later by a comparable prohibition on products including naphtha. Even if the Energy Information Administration forecasts a drop in Russian crude production as a result of the limitations, local refineries will still need to locate outlets for their naphtha.


According to preliminary data released by Vortexa Ltd., shipments of Russian naphtha to Asia soared by 84% in August, hitting approximately 130,000 barrels per day.


This increase happened despite terrible regional conditions, since local plastic producers, the key consumers, struggle with thin margins and little demand for Chinese plastics. In addition to diminishing gasoline margins, the market for converting naphtha into gasoline blendstocks is decreasing.


In Asia, the margins for naphtha production are negative, totaling to -$17 per barrel. In addition, gasoline short-term spreads are contango, a bearish trend signaling an abundance of supply in the near future.


According to Ashraf, Russian naphtha may have been combined with the country's Urals petroleum and shipped to India during the beginning of the current year. "The blending of heavy full-range naphtha or heavy naphtha in limited quantities might produce much bigger profits than selling naphtha cargo straight," he explained.

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