MOSCOW (MRC) -- The European diesel market is finding unexpected support from disruption in the refining sector from the shutdown of Russia’s Druzhba pipeline due to contaminated oil and after a Russian refinery went bust, as per Hydrocarbonprocessing.
Diesel refining margins, a measure of the profitability of making diesel from crude, hit a six-week high of nearly USD15 a barrel on Thursday and were trading close to this level.
Oil in the 1 million barrel per day (bpd) Druzhba pipeline running from Russia to eastern Europe via Belarus was contaminated by chemical compounds which made it unusable by several European refineries that rely on its supply.
"It’s all a matter of how much strategic stocks can be released because literally between German, Polish and Hungarian refineries, there are probably five or six refineries which are completely land-locked and there is literally no other way to supply them than the pipeline," one trader said.
Poland, Hungary and the Czech Republic are making available to their domestic refiners around 8 million barrels of crude from strategic stocks to tackle the Russian Druzhba pipeline shutdown, industry sources said on Friday.
Traders said that Total’s 240,000 barrel per day Leuna refinery in Germany had slashed runs because of the contamination by around 30 percent but exact details could not be immediately confirmed.
MRC