We see the Druzhba crude-supply outage primarily affecting diesel supply in Central Europe – worst-case scenario, cutting off around 100,000 b/d of supply on annual average in 2019 (see Market Watch – Issue 5).

  • According to our estimates, close to 600,000 b/d of refining capacity in Central and Eastern Europe (CEE) has been strongly impacted by the disruption of Druzhba flows. Outside of Belarus, and to some extent the Czech Republic and Hungary, however, other affected countries should be able to find alternate sources of crude supply.
  • We know that a partial restart of the pipeline is expected by the end of May, but assuming a worst-case scenario, in which Druzhba operates at reduced rates through the end of the year, this could see European crude runs come in some 200,000 b/d lower y-o-y on average over 2019.
  • We see a relatively limited impact on most refined product markets, with diesel supply being by far the most vulnerable. Based on the product output of affected refineries and our estimated reduction in intake in this scenario, we could see diesel volumes reduced by around 100,000 b/d on annual average this year, forcing affected countries to source additional supply from neighbouring nations.