Moscow’s invasion of Ukraine has caused turmoil across energy markets this year, and that disruption is set to extend into 2023. A European Union ban on most flows of Russian crude will start in December, followed by a similar move against products including naphtha about two months later. While the Energy Information Administration expects Russian crude output will drop as a result of the curbs, local refineries will still need to find outlets for their naphtha.
Russia may try to push greater volumes of a key oil product into Asia, possibly blending some with crude oil, in a bid to find alternative markets as European sanctions tighten, according to FGE.
More Russian-made naphtha – a fuel primarily used to make plastics – is likely to head into hubs such as Singapore and Fujairah from February when EU sanctions kick in, said Armaan Ashraf, global head of natural gas liquids at the consultancy. Re-exports from these regions could become common as some buyers shy away from direct imports from Russia, he said in an interview.
