Platts to no longer include Russia as potential origin source in Asia, Middle East middle distillates

Platts, part of S&P Global Commodity Insights, has decided to no longer include Russia as part of the open origin basis of its gasoil and jet fuel/kerosene cargo assessments in Asia and the Middle East.

Market feedback to a Platts consultation opened Nov. 4. showed that there has not been any significant flow of Russian-origin middle distillates into Asian and Middle East markets, and that any potential new flow from Russian as a result of changing trade patterns could be potentially disruptive.

Removing Russia as a potential source of supply in these Platts assessments prevents any such unplanned disruption and ensures that the assessments remain consistent in reflecting the value of the same non-Russian flows of product as they have done historically.

Trade flows in the 10 ppm gasoil market are expected to change significantly next year as a result of European sanctions against Russia, with Europe expected to import increased volumes of non-Russian diesel from Middle Eastern and Asian refiners.

Feedback to Platts' consultation demonstrated that the potential for future Russian middle distillate flows into Asia and the Middle East could create a two-tier market, an open market for middle distillates not subject to any sanctions or trade restrictions, and a possible market including Russian-origin material in which not all market participants would be able to transact on normal, repeatable terms.

Additionally, Australia, the biggest importer of 10 ppm gasoil in the Asia-Pacific region, imposed sanctions against the import of Russian-origin hydrocarbons in April 2022. Platts understands that much of the supply for Australia can originate in the FOB Straits market around Singapore, where several companies have sought to explicitly and pre-emptively exclude Russian-origin products in their spot trading activity in recent months.

Platts will continue to monitor closely these changing market flows and conditions. If new Russian flows into Asia emerge, Platts will consult with the industry to determine the basis on which these barrels are trading and how best to reflect the value of them in any price assessment.

All Platts gasoil and jet fuel/kerosene physical and derivative assessments in Asia and the Middle East will continue to reflect its open-origin definition that does not include Russian material. Full details of the relevant assessments can be found in the Jet Fuel and Gasoil sections on pages 18-26 of the Asia Pacific and Middle East Refined Oil Products methodology guide: https://www.spglobal.com/commodityinsights/PlattsContent/_assets/_files/en/our-methodology/methodology-specifications/asia-refined-oil-products-methodology.pdf

In a subscriber note published June 23, Platts clarified the origin standards reflected in assessments that exclude Russian-origin material. In the note, Platts stated that its assessments that exclude Russian-origin material reflect oil that is not wholly, or in part, produced, manufactured or processed in Russia, or exported from Russia. These assessments also reflect transactions where the performing vessels are not Russian flagged/registered or Russian owned. The subscriber note is reachable at https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/062322-platts-clarifies-standards-for-assessments-that-exclude-russian-origin-material

The subscriber note published Nov. 4 announcing the consultation on Russian-origin material in Asian distillate markets can be found here: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/110422-platts-seeks-feedback-on-russian-material-in-asian-10-ppm-sulfur-gasoil-assessments

Please send all feedback, questions, or comments to asia_products@spglobal.com and PriceGroup@spglobal.com. For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available to the public upon request.