(Bloomberg) -- Diesel cargoes into the European Union and the UK are poised to climb in September to the highest in about 1 1/2 years, with a rebound in shipments from the Middle East helping to offset a small dip in US flows.
Imports of diesel and gasoil into the European region are likely to be about 1.36 million barrels a day this month, according to data compiled by Bloomberg from analytics firm Kpler. That’s the highest since April 2023, when Europe boosted its pull on diesel from other regions following the bloc’s embargo on Russian fuels in February that year.
Diesel demand in Europe has been down lately compared with previous years largely due to weak industrial activity and lower road fuel consumption. However, an expected steep reduction in refinery processing in Europe amid seasonal autumn maintenance, coupled with economic run cuts by some refiners, is likely to curb supplies of the fuel in the continent this month.
“September is typically a high-demand month for freight and diesel in Europe, coinciding with the start of fall refinery maintenance season, which exacerbates the diesel deficit on the continent,” said Esteban Moreno Cots, senior demand analyst at Kpler. “The US is well-positioned to help close this gap.”
The US overtook Saudi Arabia as the biggest supplier to Europe back in July and has continued to be so. European diesel imports from the US soared to just under half a million barrels a day in August, the highest in Kpler data since the start of 2017.
Shipments from the US are expected to slip in September to about 409,000 barrels a day. That’s still almost double the supply from Saudi Arabia at about 212,000 barrels a day.
Lackluster manufacturing activity in the US in the second and third quarters of 2024 has reduced diesel and distillate fuel consumption. That depressed prices in the US, making arbitrage opportunities to Europe more profitable, Cots said.
Imports from the Middle East are poised to climb to roughly 664,000 barrels a day this month. Flows from the UAE and Oman are set to be the highest in data from Kpler since the start of 2017.
Low-cost US Gulf Coast refineries are competing with Middle Eastern government-owned national oil refiners to set the lowest regional price, the International Energy Agency said in a report last week. “With Asian middle distillate markets well supplied, Middle Eastern products are now vying with US Gulf exports for European demand,” the IEA said.
--With assistance from Alex Longley.
©2024 Bloomberg L.P.
