Monday, July 22 2024

EU could ban some Russian fuel oil imports six months ahead of deadline

EU could ban some Russian fuel oil imports six months ahead of deadline

The European Union could ban the import and transit of some fuel oil from Russia around six months ahead of the planned deadline, an EU official and four traders.

The EU has been reducing imports of Russian oil products since March, after Moscow sent thousands of troops into Ukraine, and agreed a full ban from February 2023. However, the import and transit of Russian coal is being stopped sooner – from August 10, and technically may include fuel oil.

EU bans are based on so-called Combined Nomenclature (CN) codes used by customs. One of the codes being used for the coal ban is 2707, which also refers to: “Oils and other products of the distillation of high temperature coal tar; similar products in which the weight of the aromatic constituents exceeds that of the non-aromatic constituents.”

The customs code is declared by the exporter of the product. Normally, oil products refined from crude oil have a different CN code – 2710. However, fuel oil contains aromatics that almost always exceed 50%.

Some oil products not produced from coal distillation could also be classified under code 2707 if they have chemical similarities, an EU official told Reuters, asking not to be named because of restrictions in talking to the media.

Two traders involved in Russian fuel oil trading said the potentially affected volumes would not be large. “Only small volumes (of fuel oil) are exported now from Russia directly to the European countries,” one said.

The bulk of cargoes carrying Russian fuel oil were destined in recent months to the UAE oil hub of Fujairah and ship-to-ship transfer infrastructure off Greece’s Kalamata port. In the event of an early EU ban on fuel oil, buyers could divert more cargoes for ship-to-ship transfers and to the Asian market, traders said.

In June, only about 500,000 tons of the total 3.5 million of Russian fuel oil exports were supplied directly from Russian ports to EU countries, Reuters calculations based on Refinitiv data show. More than a quarter of the 500,000 tons was shipped last month from Russia to Estonia and Latvia, which store and transfer the oil products to other destinations.