Europe Diesel Trade Flows Altered as Saudis, Russia Boost Shipments

Dramatic changes to Europe diesel trade flows are revealed in January-through- August trade data, with imports surging 30% on the same period last year, and shipments from newest supplier Saudi Arabia double levels 12 months ago.

Exports from Russia -- which surpassed the U.S. last year to become the biggest diesel supplier to the 28 member countries -- grew by a third so far this year. However the U.S., after decades of being the leading diesel exporter to Europe, saw volumes shipped across the Atlantic shrink by 2% as refiners there shifted focus to South America.

Overall volumes of ultra-low sulfur diesel shipped to the 28 member countries were at 37.5 million tons in the first eight months of 2016, up from 28 million tons at the same time last year, according to data from Eurostat.

Saudi imports gained 97%, to 4.3 million tons, compared to 2.2 million tons in the prior-year period. After hitting fresh records over three consecutive months in 2016, Russian imports were 32% higher, at 16.8 million tons, data from the European Commission's statistics database show.

Falling oil prices have made it trickier to work U.S.-Europe arbitrage cargoes amid a contango market. At the same time upgraded refineries in Russia and Saudi Arabia have been able to meet European ULSD specifications, further altering established trade flows.

Overall monthly imports have exceeded more than 4 million tons all this year, with a record 5.1 million tons seen in March, data show.

Tanker tracking from September through November indicates that ULSD shipments arriving from Russia and Saudi Arabia continue broadly around the same levels, with nearly 2 million tons alone tracked in September from Russia and Baltic states.

October Russia volumes are already tracked at 1.7 million tons, in line with monthly trade averages.

And although Saudi Arabia's two export refineries last winter had difficulty supplying ULSD to European specifications without additional blending, shipments are tracked at 250,000 tons this month and 555,000 tons next month, according to data compiled from traders, brokers and vessel satellite-tracking data.

Overall import volumes tracked are so far seen at 2.5 million tons on 56 ships in November and 3.1 million tons on 80 tankers in October. Average monthly imports in the January-through-August period, the latest months for which data are available, is 4.6 million tons, according to Eurostat.

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