Europe is ramping up diesel imports from sources around the world as an energy crisis grips the continent, forcing industry to burn petroleum products instead of increasingly expensive natural gas.
Imports from Russia hit a four-month high in July after buyers initially cut volumes after the outbreak of war in Ukraine. Purchasing volumes are likely to decline slightly in August due to low water levels in the Rhine River, according to commodity data firm Vortexa.
Meanwhile, seven tankers are heading to the continent carrying diesel from Asia, with three more expected in the coming weeks, delivering a total of 5.7 million barrels. This is the highest figure since January 2020, writes Insider.
According to preliminary data, diesel imports from India will double in August. Diesel imports from the Middle East are up 36% this month from a month earlier.
An energy crisis is rapidly sweeping across Europe as a number of factors combine to drive the price of natural gas and electricity soaring.
Russia has reduced the flow of natural gas through the Nord Stream 1 pipeline, which goes to Germany, to just 20% of capacity.
French nuclear power plants have run into trouble, with many off the grid for maintenance. And the water level in the Rhine River, which flows through Germany, has dropped to a historic low due to the heat. This has made it difficult to transport fuels such as diesel and coal to factories.
Estimated European prices for natural gas have risen sharply this year to 230 euros per MWh.
Analysts say high prices are forcing factories and other industries in Europe to burn diesel instead of natural gas. The International Energy Agency this month revised its oil demand forecasts for this year, with the switch from gas to oil a key driver.
“European diesel imports are strong this month driven by non-Russian supplies, especially from Middle Eastern and Indian sources,” said David Veh, chief economist at Vortexa. “With the falling water levels on the Rhine, the market is struggling to place the barrels where they are currently needed most – in Central Europe.”
Overall, European diesel imports totaled 1.76 million barrels per day in the first 17 days of August, compared to 1.52 million in July overall and 1.4 million in June.