The increase in diesel demand in the global market, particularly from Europe, will impact trade and the use of product tankers. Nikos Tagoulis, head of research, pointed to the uncertain diesel supply situation worldwide and noted that China has suspended refined product exports during the Golden Week holiday. This decision was made after a significant increase in diesel exports in September and has brought uncertainty regarding future policies.
Diesel Export Situation in the Global Market
Tagoulis also referred to the situation in Russia, which has been sidelined from the export market due to the expansion of diesel export restrictions until October and ongoing disruptions in refining infrastructure caused by the Ukraine attacks. In the Middle East, an improvement in crude oil exports has been observed, but refined product exports have not increased in line with this trend. According to Vortexa data, diesel and gasoil exports from the region in September reached 1.12 million barrels per day, a 36 percent decrease compared to last year.
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The Role of the United States and India in the Diesel Market
The United States remains an important diesel supplier, with diesel and gasoil exports reaching approximately 1.57 million barrels per day in the third quarter of 2026, a 28 percent increase compared to last year. This growth is due to increased exports to Central and South America, as well as a 35 percent rise in long-haul transportation to Europe. Tagoulis also noted that the United States has maintained a significant source of diesel supply to the Atlantic region by keeping exports unrestricted.
Meanwhile, Europe is paying more attention to alternative suppliers beyond the United States, with India emerging as a prominent source. Diesel and gasoil imports from India are expected to reach around 228,000 barrels per day in October, a 65 percent increase from the previous month. India, with its high refining infrastructure primarily fed by Russian and Middle Eastern crude oil, is well-positioned to respond to the global supply shortage.
Long-term arbitrage opportunities may also emerge from East Asia, particularly from South Korea, given reports of a 90,000-ton diesel shipment heading towards Northwestern Europe. This trade is particularly notable considering South Korea's traditional focus on closer markets such as Australia and East Asia. However, South Korea's ability to respond to global diesel demand is limited due to government energy security measures.
Overall, these developments will benefit the demand for product tankers. Europe's need to source diesel from the U.S. Gulf, India, and potentially South Korea supports ton-mile demand in the MR and LR sectors. The release of strategic reserves in Europe may temporarily reduce the need for immediate imports, but if supply constraints do not significantly ease, the redirection of diesel trade flows towards more distant suppliers will continue to aid tanker utilization.
Ultimately, given the critical role of diesel in the global economy, sustained high prices or long-term shortages could have implications beyond the transportation industry and impact global economic activity.
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