EU’s Rise in Product Oil Imports from the US is Shifting Tanker Market Trade Flows
According to Intermodal’s Research Analyst, Ms. Chara Georgousi, “in response to these challenges, there has been a significant uptick in Europe’s imports of refined products from WoS and in particular, from the US. This shift is attributed to favorable refining margins in the US and Europe’s strategic efforts to diversify energy sources. Data from December 2023 to January 2024 reveals a notable increase in diesel imports to Europe, reaching a six-month peak of 6.02 million mt. This 10.46% m-o-m rise underscores the strong demand in the face of logistical and maintenance challenges affecting both regions.
The robust US exports, particularly of middle distillate products to Europe, represent an adaptive strategy to the disrupted supply chains, ensuring energy supply continuity despite the Red Sea tensions. However, the upcoming planned maintenance across several key refineries, including those in the Midwest and California, suggests that the recent increase in flows to Europe may not sustain in the coming months. Consequently, there’s increasing concern that European markets, already dealing with their logistical constraints and maintenance schedules, may encounter even tighter supply margins”.
Georgousi added that “concurrently, diesel imports from the EoS to Europe have declined, with most shipments being rerouted aroud the Cape of Good Hope to avoid the Suez Canal, where transits of laden product tankers are currently about 30% below November levels and expected to continue at reduced levels. The strategic rerouting has not only significantly increased the voyage distance by approximately 70% compared to the shorter Suez route, but also led to a dramatic increase in shipping costs. Baltic Exchange data highlights that the rate for the 65kt MEG to UKC route has risen almost 140% since the beginning of December and by 52.5% since early 2024. This increase reached a record high on January 29th, with a daily TCE of $105,394 per day, a 234.14% increase from the 2023 average. Additionally, the attacks have contributed to a surge in global diesel prices, reaching a near three-month high, as concerns over increased costs and supply disruptions from Asia to Europe grow. Bloomberg reports a 12% increase in NWE’s wholesale fuel prices to just over $116/bbl since the start of 2024. Europe is expected to face tighter diesel supplies in the coming months, which may lead to higher time spreads and retail diesel prices, further challenging the European economy’s resilience against rising energy costs”, Intermodal’s analyst concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide