Will it cause problems? Russian ship full of diesel heads towards its final destination: Mexico

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According to the Argus inquiry, Russian diesel exporters have been more successful in selling their products in March thanks to higher discounts.

A new point of friction between Mexico and the United States? The consulting firm Argus reported that a Russian ship will arrive at the port of Guaymas, in Sonora, which would make it the first ship from that country to anchor in national territory since a ceiling was imposed on the price of Russian crude oil.

The Russian shipment, the first to arrive in national territory since a price cap was imposed on Russian exports, will arrive next Thursday, March 30.

The price cap was imposed by the European Union, the G7 and Australia, with the aim of restricting Russian revenues and thus making it more difficult to fight the war in Ukraine.

Loukas I, a ship with around 145,400 barrels, is expected to arrive in Sonora next Thursday, March 30. The ship left Novorossiysk, in Russia and then made a stopover in Spain, data from the Vortexa analysis firm show.

Although the company said the ship is carrying urea ammonium nitrate (UAN), the Loukas I agent says she is carrying ultra-low sulfur diesel.

“This difference could point to some kind of mix in a second country like Spain. The European Commission’s price cap guidelines state that an oil product will no longer be considered of Russian origin if blending operations in a third country involving oil products result in a different product with a different customs code.” the consultancy Argus

Who does Russia sell its diesel to?

According to Argus, Russian diesel exporters have been more successful in selling their products in March thanks to higher discounts.

This “has encouraged significant shipments from Russia to the Middle East, West Africa, transatlantic to Brazil and now to Mexico,” he added.

The firm added that a supply of “cheap” crude to Mexico could help its public finances.

“The Government of Mexico, through Pemex, aims to keep price increases for gasoline and diesel below the inflation line. Since 2022, that goal has been met, but at a high cost, as it has come at the expense of expensive subsidies. Cheaper supply from Russia could ease the pressure on Mexican finances,” she added.

Even with the sanctions imposed by the European Union (which deprived Moscow of its largest oil market), Russian diesel exports are on track to hit a record in March.

Turkey, Morocco and other nations have increased purchases, though some shipments from Russia are also being held in floating storage.

Diesel-type fuel shipments from Russia during the first 19 days of March stood at around 1.5 million barrels per day. If that pace holds, this month will see the highest exports since early 2016.

Source: El Financiero