India Set to Export Record-Low Diesel to Europe in January amid Concerns of Red Sea Risks
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 security risks in the Red Sea, according to trade sources and analysts. Shiptracking data from Kpler, LSEG, and Vortexa indicated a decline of around 80% month-on-month in volumes, ranging from 33,400-58,000 barrels per day (bpd). Experts predict that the persistently high freight costs will force sellers to seek buyers in Asia, further tightening supplies in Europe ahead of refinery maintenance season. The rise in freight rates on the Asia-Europe route, attributed to the war risk premium, is likely to hinder the opening of an arbitrage from the US Gulf Coast to Europe. Shell’s Pernis plant in the Netherlands has begun maintenance that will reduce capacity by half until mid-April, and ExxonMobil is shutting down its Rotterdam refinery from mid-February to late April. These factors, combined with attacks on Red Sea ships and Houthi attacks, have resulted in increased freight costs and limited the arbitrage from India to Europe since January.
India-origin exports of aviation fuel to Europe, on the other hand, have remained stable due to an open arbitrage window and steady demand. Jet fuel swap prices are trading at least $3 per barrel above diesel, compensating for the additional freight cost premiums. Vortexa and Kpler shiptracking data showed that around 88,000 bpd of jet fuel for January is expected to be bound for Europe.
(Source: [Zawya](https://www.zawya.com/mena/en/markets/story/Indias_exports_of_low_sulphur_diesel_to_Europe_set_to_hit_two_year_low-SNG_124842847/))
