EU could ban some Russian fuel oil imports
The European Union may prohibit some Russian fuel oil import and transit six months before the scheduled date.
The EU has been limiting Russian oil imports since March, after Moscow put thousands of troops into Ukraine, and has agreed to a total ban beginning in February 2023.
However, the import and transit of Russian coal will be suspended earlier – on August 10 – and may potentially include fuel oil. The EU prohibitions are based on customs’ Combined Nomenclature (CN) codes. One of the codes used for the coal ban is 2707, which refers to “oils and other products of high-temperature coal tar distillation; similar products in which the weight of the aromatic constituents exceeds that of the non-aromatic constituents.”
Oil products processed from crude oil typically have a different CN code – 2710. However, aromatics in fuel oil are virtually always greater than 50%.
According to an EU official who declined to be named due to media restrictions, some oil products not produced by coal distillation may also be classed under code 2707 if they have chemical similarities.
According to two merchants involved in Russian fuel oil trading, the possibly affected amounts would be small. In recent months, most cargoes transporting Russian fuel oil were intended for the UAE oil hub of Fujairah and ship-to-ship transfer facilities outside Greece’s Kalamata port.
In June, Approximately 500,000 tonnes of Russia’s total 3.5 million tonnes of fuel oil exports were shipped directly from Russian ports to EU countries.
More than a fifth of the 500,000 tonnes was delivered from Russia to Estonia and Latvia last month, where they were stored and transferred to other destinations.
EU launches legal action against Hungary on discriminatory fuel prices
More than a month after warning Budapest against the policy, the European Commission launched legal action against Hungary on Friday for discriminatory fuel pricing against vehicles with foreign license plates.
Hungary said earlier this year that lorries weighing more than 7.5 tonnes and trucks with foreign license plates weighing more than 3.5 tonnes would not be eligible for subsidized fuel at 480 forints ($1.31) per litre and would have to pay market pricing.
Oil rises on Saudi oil production expectations
Oil prices increased on Friday after an imminent increase in Saudi oil output is not expected, with additional support coming from hints that the US central bank may hike interest rates less aggressively than predicted.
Brent crude futures for September delivery were up 76 cents, or 0.77 percent, at $99.86 a barrel by 09:29 GMT, while WTI crude was up 28 cents, or 0.29 percent, at $96.06.
The most hawkish members at the United States Federal Reserve indicated on Thursday that they preferred a 75-basis-point rate increase at the Fed’s policy meeting this month rather than the larger increase traders had priced in after a report on Wednesday showed inflation was increasing.
Because of interest rate uncertainty and negative economic statistics, Brent and WTI fell more than $5 on Thursday to less than the closing price on February 23, the day before Russia invaded Ukraine. Still, both commodities recovered nearly all of their losses by the session’s conclusion.
The US official’s criticism of Saudi oil output comes at a time when capacity at OPEC members is running low, with most producers pumping at full capacity.
Meanwhile, US President Joe Biden is in Saudi Arabia for a summit of Gulf allies, where he is likely to press for the area to pump more oil.
Meanwhile, analysts predict that the global economy’s problems will continue to pressure oil prices.
This week, Brent has fallen well below $100 per barrel. It is likely to continue falling as recession fears are unlikely to abate for the time being. Bearish market sentiment has also been influenced by new COVID-19 outbreaks in China, which have slowed demand recovery.
China’s refinery throughput fell over 10% in June, with output for the year’s first half down 6%, marking the first yearly fall since at least 2011.
