India likely to export historically low diesel volumes to Europe in January due to concerns in the Red Sea.
Published on: January 31, 2024.
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India’s exports of low-sulphur diesel to Europe are set to reach a two-year low in January due to increased freight costs caused by Red Sea security risks. Shiptracking data shows volumes have declined by 80% month-on-month, prompting sellers of India-origin cargoes to seek buyers in Asia. This tighter supply into Europe, coupled with upcoming refinery maintenance season, is likely to further limit supplies. Meanwhile, Europe’s largest oil refinery, Shell’s Pernis plant in the Netherlands, has begun maintenance that will take half its capacity offline until mid-April. ExxonMobil is also shutting its Rotterdam refinery for maintenance from mid-February to late April. The increased freight costs are hindering trade from the U.S. Gulf Coast to Europe, and the situation is expected to continue in the short term. The Bab-el-Mandeb strait, a key route for cargoes sailing from India to Europe, has become more dangerous due to Houthi attacks on Red Sea ships, driving up freight costs and effectively shutting down arbitrage. India’s exports of aviation fuel to Europe, however, remain steady due to an open arbitrage window and stable demand.
