Diesel shipments into Europe this month have reached their lowest level since 2022 as a result of the Houthi attacks on merchant shipping, which are further disrupting international trade and pushing more cargoes towards Asia.
Indian diesel sales to the UK and the European Union have also plummeted due to higher freight costs fueled by the ongoing unrest in the Red Sea and unscheduled refinery maintenance in Asia, which made it more economically advantageous to send cargoes east rather than west.
In the first two weeks of February, the average number of barrels of petroleum arriving in Europe from India was just 18,000 per day, a 90% decrease from January’s average, according to statistics collated by Bloomberg from Vortexa Ltd. James Noel-Beswick, an analyst at Sparta Commodities, claims that the decline was partially caused by the increased shipping expenses to the west last month.
“The economics to export east – Singapore region – were a lot better than those west,” Noel-Beswick told the media.
Because of the Houthi threat, tankers bound for Europe or the Atlantic Basin are being compelled to take the longer and more expensive route around South Africa’s Cape of Good Hope or utilize the Suez Canal, “with the risks involved and extremely high war risk insurance”.
The data indicates that during the first two weeks of February, there were no imports of diesel-type fuel into the EU and only one cargo into the UK. However, according to a port report and tanker-tracking data provided by Bloomberg, the Marlin Sicily and Marlin La Plata recently loaded barrels in India and are headed for Rotterdam, with the former signaling arrival later this month.
During the first two weeks of the month, the amount of diesel-type fuel arriving in Asian countries—including some shipments into Saudi Arabia and Bangladesh—rose sharply from India. More cargo is being carried towards East Asia by ships like the Peace Victoria and Orange Victoria.
According to Noel-Beswick, improved arbitrage economics might result in more diesel exports from India to Europe in the upcoming weeks.