Diesel supplies to Europe are under pressure following disruptions at US refineries, aggravated by global instability.
ADVERTISEMENTUS diesel exports to Europe almost halved in February to 6.65 million barrels, down from 11.44 million barrels in January, according to analysis by ship tracking firm Kpler.
The drop in supply was driven by technical failures and planned refurbishments at US refineries, which has cut output to 10% below the prior five-year's seasonal average.
Official government data shows that, in the week to 9 February, US distillates output fell to 4 million barrels per day, the lowest figure seen since December 2022.
A key loss to the market is BP's Whiting refinery in Indiana, which shut at the start of February after a power cut.
Reduced production levels are also linked to a planned refurbishment of Motiva Enterprises' plant in Port Arthur, Texas, and technical failures at TotalEnergies' refinery in Texas.
Gas prices in Northwest Europe rose throughout February to over $118 a barrel, partly as a result of the disruption.
This is up from $109 seen during the same period a year earlier.
Squeezed global supplies
Europe has become increasingly reliant on the US for diesel since the invasion of Ukraine, which forced a number of countries to reduce their reliance on Russian fuel.
Recent attacks by the Houthis in the Red Sea have only put further pressure on supply, as ships carrying oil from the Middle East and Africa must now travel around the Cape of Good Hope to avoid rebel fire.
A third factor squeezing supply is a decline of stocks at the Amsterdam-Rotterdam-Antwerp (ARA) refining hub.
Whilst Europe built up reserves of diesel following the invasion of Ukraine, ARA stockpiles dropped at the end of January as a result of significant exports to regions such as Latin America.
Looking ahead, analysts suggest that disruptions in the Middle East could continue, but a rebound in US refinery output is likely.
Insight firm IIR Energy on Friday estimated that US refiners would increase available capacity by 431,000 barrels per day for the week ending 23 February.
