India’s Diesel Exports to Europe see Nearly Three-Fold Jump in February

· The sharp rise in supplies to Europe increased India’s overall exports of diesel to 600,000 bpd in February, up from 450,000 bpd in January.

· Amid the threat of Houthi attacks on ships, a large share of diesel exports to Europe was diverted to transit via the Cape of Good Hope, avoiding the Red Sea and the shorter Suez Canal.

· However, the situation changed in February as margins in the European market expanded to become attractive for Indian refiners even after factoring in the increased freight.

[ABS News Service/16.03.2024]

Diesel exports to Europe quadrupled in February over the previous month as enhanced margins on the fuel lured more Indian cargoes into the continent.

Indian refiners exported 204,000 barrels per day (bpd) of diesel to Europe in February, up from 56,000 bpd in January, according to energy cargo tracker Vortexa. The sharp rise in supplies to Europe increased India’s overall exports of diesel to 600,000 bpd in February, up from 450,000 bpd in January. No diesel was exported to the US and supplies to other destinations remained steady in February.

“The east-west arbitrage re-opened in February, partly supported by more European refiners heading into maintenance. India’s diesel exports to the US have traditionally been minimal due to ample supplies in the US,” said Serena Huang, an analyst at Vortexa.

Amid the threat of Houthi attacks on ships, a large share of diesel exports to Europe was diverted to transit via the Cape of Good Hope, avoiding the Red Sea and the shorter Suez Canal. The longer route means higher freight. This combined with weak east-west arbitrage helped attract more Indian diesel cargoes to Asia in January.

However, the situation changed in February as margins in the European market expanded to become attractive for Indian refiners even after factoring in the increased freight.

India’s overall refined product exports in February totalled 1.39 million barrels a day (mbd), up 23% from January, with the increase in exports mainly headed to Northwest Europe, said Huang. Exports of refined products to Europe rose 120% to 310,000 bpd in February, while supplies to the US nearly halved to 56,000 bpd. Exports to Asia remained steady at around 400,000 bpd. ”India mainly exports gasoline blending components to the US east coast. Given ample supplies from Europe and domestically, combined with bearish demand and high freight costs, it has not been profitable for Indian refiners to export blending components to the US,” said Huang.

Petrol and diesel account for two-thirds of India’s annual exports of refined products. Refiners also export jet fuel, naphtha, vacuum gas oil and fuel oil. India mainly imports LPG and pet coke.