METHODOLOGY: Platts opens consultation on Russian-origin ULSD market

Platts, part of S&P Global Commodity Insights, is seeking industry feedback on how best to provide continued transparency into the Russian-origin diesel market once European Union sanctions on Russian oil products come into force in February 2023.

Russia has traditionally been one of the most significant exporters of diesel to the global market, with the majority of its exports heading to European importers.

As European markets increasingly shifted away from buying Russian-origin oil products this year after the Russian invasion of Ukraine, Platts changed its benchmark assessment methodology for diesel cargoes delivered in Northwest Europe and the Mediterranean to exclude Russian-origin product with effect from June 1, 2022.

At the same time, Platts launched a new assessment for ULSD cargoes CIF NWE (all origin) (ALORA00), which reflects material from all origins, including Russia, to give transparency into the continued flow of Russian diesel to some importers.

EU sanctions prohibiting the import of Russian oil products are due to come into force on Feb. 5, 2023, by which point the new all origin assessment will no longer be able to reflect Russian-origin product as its current methodology is on a CIF Northwest Europe basis.

The all origin assessment currently reflects diesel from all origins, including Russia, meeting French specification for delivery basis Northwest Europe 10-25 days forward from date of publication, and a 30,000 mt cargo size.

Platts also publishes the corresponding all origin spread (ALORB00) which reflects the difference in value between the all origin assessment and the benchmark ULSD 10 ppm CIF NWE cargo assessment (AAVBG00), which has excluded Russian-origin as of June 1, 2022.

Initial market feedback has suggested a continued need for transparency in the Russian-origin diesel market after February, and Platts is opening this consultation to seek feedback on how this market is expected to evolve and what role a price assessment reflecting the value of Russian diesel could play in this evolution.

As part of the consultation, Platts is inviting feedback on the future of the ULSD CIF NWE (all origins) assessment (price symbol ALORA00) and related all origin spread (ALORB00), and whether these assessments should be discontinued or amended to reflect the continued flow of Russian oil products to markets outside the EU.

In particular, Platts is seeking feedback on whether FOB or delivered incoterms are expected to be the prevalent method for trading Russian material and, alongside that, whether the Russian Baltic region would be the most representative of these FOB flows. Similarly, Platts is seeking feedback on clip sizes, loading times and other relevant pricing parameters.

The subscriber note announcing the launch of the all origin assessment and the exclusion of Russian-origin product from the main European diesel cargo benchmarks can be found here: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/060122-platts-excludes-russian-origin-product-from-european-diesel-gasoil-cargo-assessments-june-1

Please send any feedback, questions or comments by Dec. 16, 2022, to Europe_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.