Russia continues to supply fuel to the African market

Russia, which sharply increased fuel deliveries to Africa after the introduction of the EU embargo in February, reduced exports in the summer months, but it is still a multiple of last year. According to S&P Global, in June the supply of Russian oil products to Africa amounted to about 250,000 barrels per day. According to experts, the new scheme for distributing oil product flows will last for a long time, but an increase in shipments to Africa depends on the solvency of local consumers and the desire of Russian companies to invest in local infrastructure.

Deliveries of Russian oil products to Africa in June, according to S&P Global, decreased significantly relative to the peaks of February-March, but remained at a historically high level relative to the same period in 2022. Then exports were below 50 thousand barrels per day, and in June 2023 they were approaching 250 thousand barrels per day.

A significant increase in supplies from the Russian Federation is observed in Tunisia, Nigeria, Morocco, Libya and Egypt.

Shipments from Russia to Africa jumped sharply after February 5, when entered into force EU embargo on Russian oil products. Thus, in March, deliveries to Africa reached 420 thousand barrels per day, having increased by 14 times over the year and amounting to almost a quarter of all Russian exports of petroleum products.

S&P Global estimates that the increase in Russian fuel deliveries was supported by a reduction in exports of gasoline from the Netherlands to Africa after local regulators introduced new rules regarding the content of sulfur, benzene and manganese in exported fuel. In turn, in some African countries, such as Morocco, which did not export fuel a year ago, the volume of deliveries abroad is now growing, while imports from Russia are growing at the same time. According to S&P Global Senior Analyst Rebecca Foley, the current trend of increasing shipments from Russia to Africa is long-term.

“Russia has managed to find new markets for the export of its key refined products, and these new trade flows represent structural changes in the market that are not going anywhere,” the expert said.

Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation, notes that although the volume of supplies to Africa has decreased relative to the highs of early spring, the number of consumers on the continent is expanding. Countries such as Senegal, Ghana and Togo appeared on the list of buyers. In recent months, North African countries have developed a new strategy in which they cover their domestic consumption with inexpensive Russian oil products, exporting their own products at a higher price. Such a scheme, taking into account the relatively short transport arm from the Russian ports of the Baltic to North Africa, is convenient for everyone, the analyst believes. At the same time, Igor Yushkov notes that many African countries have economic problems and there are risks of non-payments for fuel supplies.

Vsevolod Sviridov, an expert at the Center for African Studies at the National Research University Higher School of Economics, believes that the further possibility of using the jurisdictions of the countries of North and West Africa for the re-export of petroleum products depends, among other things, on the optimization of EU sanctions mechanisms and the ability of Europe to replace Russian supplies. It is unlikely that African countries will interfere with such operations. But in any case, he believes, Russian exporters need to work now on gaining a foothold in new markets – not only to use African countries as a transit point, but also to create a long-term presence there. “Moreover, Africa is a much more dynamically growing market than Europe: over the past ten years, the volume of oil product imports to Africa has increased more than five times, to 2.5 million barrels per day,” the expert adds.

According to Mr. Sviridov, population growth in Africa, together with a shortage of oil refining capacity (only 2.3% of the installed capacity of refineries in the world) guarantee long-term market growth. To consolidate the market share and expand supplies from Russian companies, the expert believes, investments are needed in the distribution and marketing infrastructure – oil storage facilities, pipelines, since infrastructural restrictions constrain the capacity of this market.

Olga Mordyushenko