In the wake of continued Houthi attacks on merchant shipping, international trade have been significantly interrupted, particularly in the diesel market. With disruptions in the Red Sea impeding maritime routes, diesel shipments from Bharat to Europe have dwindled to their lowest levels since 2022, redirecting more cargoes towards Asia.
The European Union and the UK have experienced a sharp decline in diesel imports, attributed to soaring freight costs exacerbated by ongoing turmoil in the Red Sea and unexpected refinery maintenance in Asia. These factors have made it economically favourable to redirect trade flows towards Asia rather than Europe.
Data from Vortexa Limited, compiled by Bloomberg, reveals that diesel arrivals from Bharat into Europe averaged a mere 18,000 barrels per day during the first half of February, plummeting over 90 per cent compared to January’s average. James Noel-Beswick, an analyst at Sparta Commodities, attributes this decline to the increased shipping costs to the west last month.
“The economic viability of exporting east, particularly to the Singapore region, far outweighed that of westward shipments,” explained Noel-Beswick. Tankers bound for Europe or the Atlantic Basin face the dilemma of navigating around South Africa’s Cape of Good Hope, incurring longer journeys and higher costs, or braving the risks and exorbitant war risk insurance associated with the Suez Canal.
During the initial two weeks of February, no imports of diesel-type fuel were recorded into the EU, with only one shipment reported into the UK. However, vessels like the Marlin Sicily and Marlin La Plata, loaded with barrels in Bharat, are en route to Rotterdam, with the former expected to arrive later this month, as per port reports and tanker-tracking data compiled by Bloomberg.
Meanwhile, diesel-type fuel arrivals from Bharat to various Asian destinations have witnessed a surge, including shipments to Saudi Arabia and Bangladesh. Vessels like the Peace Victoria and Orange Victoria are among those sailing towards East Asia, reflecting the changing trade patterns.
Noel-Beswick anticipates a rebound in diesel exports from Bharat to Europe in the forthcoming weeks, driven by improved arbitrage economics. As the dynamics continue to evolve amidst geopolitical tensions and trade disruptions, the resilience of international trade routes becomes increasingly crucial.
