(Bloomberg) -- Shell Plc is limiting sales of heating oil to some wholesalers in Germany, the latest sign of how Russia's invasion of Ukraine is causing chaos in the European energy market.
The reduction in spot sales by Europe's largest oil company is aimed at ensuring it can continue to meet contractual obligations after Russia's invasion of Ukraine caused massive distortions and shortages in energy markets, Shell told the buyers of heating oil and other fuels in an email seen by Bloomberg. Shell could stop selling at some delivery points, it said.
A Shell spokesman wasn't immediately able to comment.
On Friday, Shell controversially bought a cargo of Russian crude despite shipping companies and other traders being wary of touching the nation's barrels following the invasion of Ukraine. Shell said the move was to ensure fuel supplies.
German heating oil is a near-identical product to diesel in Europe, prices of which point to a market that's running low on inventories. Traders are willing to pay huge premiums to get the fuel this month rather than waiting until April.
Global oil and fuel prices are surging because of concern about supplies from Russia. Shell, which operates two of Europe's biggest oil refineries -- in the Netherlands and in Germany -- bought a cargo of Russia's main export crude grade at a record discount on Friday.
READ: Shell Buys Russia's Flagship Urals Oil at a Record Discount
READ: Europe's Diesel Market Is Pricing Like Supply Is Running Out
“Our scope of action to fulfill our contractual obligations is becoming narrower due to these circumstances, which are beyond our control,” Shell told customers. It is currently able to meet contractual obligations, it said.
The so-called prompt timespread for diesel is trading at a record. It means traders have been willing to pay as much as $92.25 a ton to get the fuel this month on the region's benchmark contract, rather than having to wait until April, implying an urgent need for supply.
Brent crude oil surged to $139.13 a barrel at one stage on Monday, before paring most of its gains. It was up about 1.6% at $120 a barrel at 2:19 p.m. in London.
©2022 Bloomberg L.P.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
