Russia Extends Diesel Export Ban Through January but Plans to Quadruple Shipments in November

Economic Warfare & Trade Policy › Trade & tariffs

The Russian oil products tanker Volgoneft-250 (file photo). Photo: pete, Wikimedia Commons, CC BY 2.0.

Russia’s government extended its general ban on diesel exports by producers through the end of January, while preparing exemptions that would let some suppliers keep shipping to world markets, Bloomberg News reported via gCaptain. A government statement Saturday said the decree was meant to keep the domestic fuel market stable. The decree had not yet been published.

Key figures: 2.15M tons russian diesel exports planned for november · ~80% hormuz shipments compared with prewar levels · 28+ open-source reports of ship damage in hormuz in october

Exemptions allow a jump in exports

Deputy Prime Minister Alexander Novak said Russia plans to export about 2.15 million tons of diesel in November, after shipping about 510,000 tons in October. He said Ukrainian attacks on Russian refineries could reduce export volumes, but not significantly. Four tankers carrying Russian diesel had left Baltic ports as of late October, according to Novak. Similar exemptions were used in October and are planned for November.

Russia relaxed the terms of its ban in October after President Donald Trump said he was working with Russian President Vladimir Putin to release Russian diesel onto global markets, Bloomberg reported. Ukraine’s latest strike on a Russian refinery is covered in our Kstovo refinery report.

By the numbers

The November plan of about 2.15 million tons would be roughly 4.2 times October’s 510,000 tons, a TBR calculation from Novak’s figures. Both numbers are Russian government estimates rounded by Novak, and actual loadings may differ.

Hormuz risk keeps shipping costs high

Shipments through the Strait of Hormuz are running at about 80% of prewar levels, but the risk has raised insurance costs, and in early October it cost more in some parts of the world to hire a supertanker than to send a rocket into space, Bloomberg reported via gCaptain. There were at least 28 open-source reports of damage to ships in the strait in October, a record, though a U.S. official said Iran had not increased the number of its attacks; more serious damage led to more incidents being flagged.

A surge in fighting could push oil prices into the $120 to $130 range, according to analysis by Bloomberg Economics chief emerging markets economist Ziad Daoud. Under the U.S. blockade, only a tiny fraction of Iran’s prewar oil exports of 2 million barrels a day is leaving the country, via land routes, Bloomberg reported.

Secretary of State Marco Rubio gave a different measure in Atlanta. “Today, the amount of fuel getting through there is comparable with what was coming out before the conflict,” he said, “but nonetheless we’ve had to defend these ships from drones and missiles almost every single night,” according to a State Department transcript. Rubio said attacks were also occurring in the Bab al-Mandeb. A Qatari LNG carrier hit in the Gulf is covered in today’s Middle East report.

G20 chair’s statement on energy and food

The G20 foreign ministers’ meeting in Atlanta ended with a G20 chair’s statement issued by the United States, which holds the G20 presidency, published by the State Department. It called it “important to ensure secure, resilient, and uninterrupted energy flows, including safe navigation and transit passage through international waterways and the security of critical infrastructure.” It said trade in food and agricultural products “should not be used as a tool for economic or political coercion,” and called for partnerships with the private sector on processing, refining and recycling critical minerals. Quad foreign ministers also issued a joint release on economic security, the State Department said.

Chip prices cool in Japan

Kioxia, the Tokyo-based flash memory maker, forecast operating profit of ¥2 trillion ($12.7 billion) for the current quarter, short of estimates of ¥2.35 trillion, Bloomberg reported in The Japan Times. The company said average NAND flash selling prices rose by a mid-20% rate in the July-September quarter, down from 70% in the prior quarter, and its outlook implies nearly flat price rises. Kioxia shares fell 11% on Friday on Tradegate, a German exchange.

Watch for publication of Russia’s diesel decree and the November exemption list, Hormuz insurance costs, and any follow-up to the G20 statement. Our Oct. 31 trade war report covered the U.S. pause of port fees on Chinese ships.

Sources

• gCaptain: Russia Extends Ban On Most Diesel Exports Through January
• gCaptain: Shipping Strikes In Hormuz Leave Both Sides With Economic Pain
• US Department of State: Secretary of State Marco Rubio at a Press Availability
• US Department of State: G20 Chair's Statement, G20 Foreign Ministers' Meeting
• US Department of State: Quad Joint Press Release on Economic Prosperity and Security
• The Japan Times: Kioxia warns flash memory prices stalling after outlook miss

Additional sources

• South China Morning Post: G20 foreign ministers end Atlanta meeting
• South China Morning Post: China's banks and regulators meet on stock measures
• Federal Register: public inspection documents