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Deliveries of US diesel to Europe are down. The disruption to global shipments was caused by rebel actions in the Red Sea. This has led to a shortage of this fuel. The situation could only partially improve in the coming period.
The downturn in US refinery activity and disruptions in global trade have reduced Europe’s diesel supply in recent weeks. This has reduced US diesel exports to Europe, which had previously reached historic highs.
Difficulties in securing US diesel are complicating an already existing supply crisis in Europe, which previously relied on Russian fuel exports. US diesel prices briefly rose this month to a four-month high.
On the other hand, most of Europe’s other suppliers from the Middle East and Asia have had to bypass the Cape of Good Hope because of rebel attacks. This has added to long delays and made the trade less profitable.
European diesel imports from the US have almost halved this month. At 6.65 million barrels, down from 11.44 million barrels in January, which marked the highest level since August 2017.
Europe’s diesel crisis: prices rise as US imports fall
Diesel prices in Northwest Europe rose steadily during February, averaging over $118 per barrel, up from $109 last February.
With European refiners starting their own overhauls in March and April, European diesel prices are likely to rise further, and this could help revive flows of US-produced diesel to Europe, said Matt Smith, an analyst at Kpler.
Meanwhile, expectations of an imminent US refinery restart have pulled down US market prices by almost 30% from recent highs in US diesel prices.
US refiners are expected to increase available refining capacity by 431,000 bpd in the week ending February 23, reducing oily capacity to 1.8 million bpd, research firm IIR Energy said Friday.
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