Oil merchants are increasing diesel shipments from Asia and the Middle East to Europe in October to profit from a wide price gap between the regions, following weeks-long strikes at French refineries, that have reduced stock levels, Reuters reported quoting trade sources and shipping data.Â
According to ship tracking data from Refinitiv, about 289,000 tonnes of gasoil will be loaded from South Korea and China to northwest Europe in October, up from 137,500 tonnes in September.
Exports from India and the Middle East to northwest Europe in October were almost 480,000 tonnes and 834,000 tonnes, respectively, up from 361,000 tonnes and 511,310 tonnes a month earlier, data revealed.
This month has seen a flurry of spot tenders from South Korea and Taiwan, two of Asia’s largest fuel exporters, and China will also expand its exports of diesel after Beijing upped its allocation.
Supplies in Europe are now much more limited as a result of merchants diverting multiple cargoes from the Middle East to the New York harbour area due to the United States’ skyrocketing fuel costs.
“European [gasoil] cracks could come down even further by $10-15 a barrel once the strikes end, making it risky for Asian barrels to head over here even on a prompt loading basis given the strong backwardation, although the arbitrage is technically open on paper,” said Mark Williams, a research director at Wood Mackenzie, quoted by Reuters.