Russian Imports Ban Drives Up the EU and US Naphtha Prices

The price of Naphtha in the European region has been rising steadily throughout this month. The difference between European Naphtha costs and its Gasoline equivalent decreased to its lowest point in more than two months. The reduction reflects current Naphtha market pricing patterns in Europe due to EU sanctions against Russian oil products that have been in place since February 5 and the lack of Europe's main supply of oil products.

Meanwhile, the tightening supply situation in the European markets has created a scenario of an increasing flow of oil products into the Asian markets. Despite the easing of upstream Crude oil costs in the European market during recent weeks, the price of Naphtha in Europe has been rising. The rising demand for Naphtha, which recently reached its highest in recent months, is caused by the increasing requirements for Gasoline blending in Europe.

The rising performance of the downstream automotive sector in the US market is raising the requirement for Gasoline. Naphtha, the primary blendstock for Gasoline in the US, is witnessing huge price hikes this month. Since the EU ban Russian imports, the US will try to fill the gap, which can further contribute to the increasing cost of the commodity in the US market.

According to ChemAnalyst, the price of Naphtha in Europe will continue rising until someone steps up to fill the gap, and the European markets will likely price it high to attract more import barrels. The cost of Naphtha in the US market will also remain high as the domestic market will want to meet the import requirements in the EU markets. Oil product flows from the US to the European importing markets are anticipated to hit a record high in March as a result of the surge in demand for US upstream oil, leading to an increase in the price of Naphtha in both the EU and the US.