Europe is on track to import this month the highest volumes of diesel from the Middle East and Asia in seven years as the EU turns to alternative supply after the ban on imports of Russian diesel and other fuels took effect on February 5.
Diesel and gasoil arrivals to Europe are expected to be around 1.55 million barrels per day (bpd) in February, slightly above the imports in January, according to initial estimates by Vortexa cited by Bloomberg.
Shipments of diesel-type fuels from the Middle East and Asia are set to reach the highest since 2016 if all observed cargoes from East of the Suez Canal arrive before the end of the month, per Vortexa and Bloomberg calculations.
At the same time, Europe’s imports of Russian diesel are set for a slump in February after the ban took effect early this month. Russian diesel shipments to Europe are estimated at around 282,000 bpd in February, the lowest in seven years. This month’s diesel imports from Russia compare to more than 680,000 bpd in 2021 and around 600,000 bpd for most of 2022.
Just before the fuel embargo, Europe was buying more diesel from the United States and Saudi Arabia in preparation for the EU ban on seaborne imports of Russian refined products, yet Europe still remained the biggest buyer of Russian diesel in January. Before the embargo, more than half of Russian fuel exports to the EU were diesel. Europe has also been stocking up on Russian supply in recent months ahead of the ban.
Despite the EU embargo on fuel imports from Russia, diesel prices and diesel refining margins in Europe have trended lower in recent weeks due to high inventories at the major refining hubs and milder winter weather in most of Europe, which has reduced demand for fuels.
By Charles Kennedy for Oilprice.com