Europe's diesel and gasoil imports from outside the region fell to the lowest recorded level in history in September 2023, averaging 1 million barrels per day (kbd). This figure represents a decrease of 600,000 barrels compared to the same period last year. The major decline in diesel exports to Europe has come from Russia and the Middle East, amounting to 580,000 barrels compared to last year.
Decline in Refinery Activities
European refineries' performance in September decreased by about 600,000 barrels per day. While it reached the highest level of the year in August, it is now facing a severe decline. High profit margins have led to maintenance and repairs at key refineries such as Tarragona (180,000 barrels), Thessaloniki (66,000 barrels), and Gonfreville (247,000 barrels) being postponed until 2027. Therefore, the maintenance season may have already peaked in September.
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Limited Supply from the United States and Asia
The United States remains the main supplier of diesel for Europe, providing 400,000 barrels per day in September, which is an increase compared to last year but a decrease from the record 445,000 barrels in August. Additionally, the cost of transporting diesel from the United States to Europe has significantly increased, with shipping rates from Houston to Amsterdam reaching $90 per ton.
If Europe cannot secure more diesel from the United States, the alternative option will be Asia. China's marine diesel exports have significantly increased, but almost none of these shipments are headed to Europe. Only one shipment for Europe was loaded in September, scheduled to arrive in France in late October.
India has remained a more important eastern supplier, increasing its exports to Europe by 50 percent in September compared to the previous month, reaching 240,000 barrels per day, but still 23 percent lower than the volumes of September last year.
Without an expansion of the diesel price gap between Asia and Europe, shipments from China in the fourth quarter are likely to prioritize closer destinations. Diesel and gasoil inventories in the ARA region are still sitting 25 percent below seasonal averages, and given the inability of other suppliers to quickly increase supply, Europe will rely on its domestic supply.
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