The EU imported more than half its diesel and gasoil on Long Range 2 (LR2) tankers in March for a second consecutive month, demonstrating how trading patterns have shifted since the EU banned Russian deliveries.
Vortexa data show the EU imported 1.76mn t from outside its borders on LR2s in the month, meaning that class of ship carried around 53pc of the total, up from 50pc in February and just around 25pc in 2022.
The two largest suppliers in March were Saudi Arabia and India, which together provided nearly 40pc of the total 3.3mn t imported diesel and gasoil. Almost all the shipments from those two countries came on LR2s, which can carry around three times more than the Handysize tanker class that used to dominate the EU's trade with Russia. Some LR2 cargoes entering the EU transfer onto smaller tankers before discharging, sometimes to access ports that lack the capacity to berth the larger class.
Rates for LR2 tankers to carry diesel from the Mideast Gulf to northwest Europe have hovered just above $50/t since mid-February, after rising from less than $35/t at the start of that month. But this is well below the winter heights of around $70/t, when exceptionally high Chinese exports were pushing far higher amounts of diesel and gasoil from east to west.
The total 3.3mn t that arrived in the EU in March was by far the lowest in any month since Vortexa records began in 2016, and more than 10pc below the next slowest month on record. It implies that only around 111,000 t/d arrived from outside the bloc in March, compared with 165,000 t/d last year and more than 200,000 t/d in January, before the EU's ban on imports of Russian products.
Arbitrage economics from east of Suez into Europe looked unworkable on paper throughout March after worsening sharply in February. The EU received less diesel and gasoil in March from its largest suppliers east of Suez — Saudi Arabia, India, the UAE and China — than it did in December or January, when it was still receiving Russian shipments at a higher rate than usual.
Strikes at the French Mediterranean port of Fos meant it received no diesel or gasoil from non-EU origins in March. It is usually among the dominant diesel trading hubs in the region and handled 6pc of all the diesel and gasoil arriving in the EU from outside the bloc last year. Amsterdam-Rotterdam-Antwerp (ARA) handled around 28pc, up from around 22pc last year.
Argus has been assessing prices for fully loaded diesel LR2 shipments delivered to Europe since last year. This year, the Argus Open Markets online platform hosted the first ever public offer of such a shipment, which was placed by the UAE's state-owned Adnoc.
