Diesel prices rise as Russian refineries come under attack

Attacks on Russian refineries: why diesel is going up despite the embargo

How can diesel be getting more expensive in Spain if the EU banned imports of Russian crude and refined products? The answer has two layers, and neither is pleasant. The first is that diesel prices are global: when Ukraine bombs Russian refineries, that refining capacity disappears from the market, and we all pay for the shortfall. The second is more uncomfortable: for months, part of Russia's diesel kept entering Europe through a back door that only closed seven months ago.

The timeline of sanctions on Russian oil

The EU banned Russian crude transported by sea on 5 December 2022, and refined products, including diesel, on 5 February 2023. The G7 added a price cap: 60 dollars per barrel of crude, 100 for products that trade at a premium (diesel, kerosene, petrol) and 45 for those that trade at a discount. In theory, not a single litre of Russian diesel should be getting through.

If no Russian diesel is getting in, how does its destruction affect us?

Because the refining market is global. If Ukraine knocks out a refinery in Russia, China or India do not make up for it right away, and the benchmark price rises worldwide. On top of that there is the back door: for months, ships carrying Russian cargo stopped off in third countries and then arrived in Europe as product "refined at source". That route was closed seven months ago, according to the data analysts are working with.

And here is the figure that throws everything off: for years we have been paying for weapons for Ukraine and, on top of that, we pay more for diesel. Europe's energy strategy has the Kremlin smiling as it fills its coffers with oil sold to third parties, while the ordinary citizen bears the cost. If the goal was to punish Moscow, the plan has backfired right into our wallets.