① As the Houthis continue to disrupt Red Sea trade routes, the global oil trade pattern has also changed; ② India's diesel transportation routes have been greatly affected: a large amount of diesel that should have flowed into the EU and the UK is being shipped to Asia.
AFP, Feb. 20 (Editor: Liu Rui) As the Houthis continue to disrupt Red Sea trade routes, the global oil trade pattern has also changed. Among them, India's diesel transportation routes have been greatly affected: a large amount of diesel that should have flowed into the European Union and the United Kingdom is being shipped to Asia.
Diesel traffic from India to Europe is at its lowest level since 2022 so far this month. According to data from Vortexa Ltd., in the first two weeks of February this year, the average fuel from India to Europe was only 18,000 barrels per day, a sharp drop of more than 90% compared to the January average.
Diesel inflows into the EU and the UK have declined sharply due to rising freight rates caused by ongoing turbulence in the Red Sea and unplanned refinery repairs in Asia, making it far more cost-effective to ship goods to the East than to the West.
James Noel-Beswick (James Noel-Beswick), an analyst at Sparta Commodities (Sparta Commodities), said that part of the sharp drop in the amount of fuel delivered by India to Europe was due to the increase in shipping costs to the West last month, and “the economy of exporting to the East (Singapore region) is much better than the West.”
Due to the threat of the Houthis, tankers bound for Europe or the Atlantic basin can only choose to make a detour to Cape of Good Hope in South Africa, which greatly increases the range and cost; and if these tankers want to pass through the Suez Canal, the risk of the route will increase dramatically, and they will need to buy extremely high war risk insurance.
The data shows that in the first two weeks of February this year, the EU was unable to obtain external diesel fuel; only one batch of diesel was imported into the UK. Meanwhile, diesel fuel shipments from India to Asian destinations — including some goods to Saudi Arabia and Bangladesh — surged in the first two weeks of this month.
Noel Beswick predicts that India's diesel exports to Europe are expected to increase in the next few weeks as room for arbitrage increases.