Ukraine Latest: More Shortages; Misunderstanding Russian Strategy?

Ukraine Latest: More Shortages; Misunderstanding Russian Strategy? 1

Yves here. This post is launching before 7 AM EDT because RSS. If you see this opening, that means it isn’t done. You can still pipe up based on what you see but be warned I may address what you are get to on your own! So please do re-read the post after 8, when it should be complete.

Even though we aspire to give a decent overview of the Ukraine-Russia state fo play in Links, I thought to highlight some topics here. I’m being a bit terse today

Shortages Starting to Bite

The Financial Times alone provides two new stories on shortages. One, which just broke, is Vitol chief warns of diesel rationing following Russian supply disruption

The head of Vitol, the world’s largest independent oil trader, has warned of a “systemic” shortage of diesel in Europe stemming from potential disruption to Russian supplies, which could lead to fuel rationing.

Speaking at the FT Commodities Global Summit on Tuesday, Russell Hardy said that the shift to more diesel consumption over petrol on the continent had helped to create shortages of the fuel.

“The thing that everybody’s concerned about will be diesel supplies. Europe imports about half of its diesel from Russia and about half of its diesel from the Middle East,” said the chief of Switzerland-based Vitol. “That systemic shortfall of diesel is there.”

Note that we have been warning of diesel shortages. The rest of the story suggests refineries could produce more diesel at the cost of lowering the amount of other products generated; shipbrokers remain optimistic that other refiners will fill the gap. But that does not fully solve the problem of diesel demand, when filling that need is effectively diverting supply from other uses.

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