Europe is boosting its purchases of diesel.
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Europe has ramped up its imports of diesel from Russia, Asia, and the Middle East amid an energy crisis.
Natural gas prices have skyrocketed, forcing some industries to burn diesel instead of their normal fuel.
There are seven tankers currently laden with Asian diesel heading for Europe, while Russian imports have jumped.
Europe is stepping up its imports of diesel from sources around the world as an energy crisis grips the continent, forcing industries to burn the oil product instead of increasingly expensive natural gas.
Imports from Russia hit a four-month high in July after buyers initially cut back following Vladimir Putin’s invasion of Ukraine, according to commodities data company Vortexa, although purchases are likely to cool slightly in August as the river Rhine runs low.
Meanwhile, there are seven tankers heading to the continent with diesel from Asia, and three more expected in the coming weeks, delivering a total of 5.7 million barrels. That’s the most since January 2020, Vortexa told Insider.
Early indications suggest diesel imports from India are set to double in August. And imports of diesel from the Middle East have surged 36% this month so far compared to a month earlier, Vortexa said.
An energy crisis is fast engulfing Europe as a number of factors combine to send natural gas and electricity prices skyrocketing.
Russia has slashed the flow of natural gas through the Nord Stream 1 pipeline, which goes to Germany, to just 20% of capacity as tensions run extremely high over Ukraine.
French nuclear power plants are beset by problems, with many off the grid for maintenance. And water levels on the river Rhine, which runs through Germany, are very low after a heatwave. That’s made it more difficult to transport fuels such as diesel and coal to factories.
Benchmark European natural gas prices have skyrocketed this year to 230 euros ($234) per megawatt hour, up from around 25 euros a year earlier, according to data from the ICE Exchange.
Analysts have said high prices are forcing factories and other industries in Europe to burn diesel instead of using natural gas. The International Energy Agency this month revised up its predictions for oil demand this year, with gas-to-oil substitution a key driver.
“European diesel imports are rising strongly so far this month, lad by non-Russian supplies, especially from Middle Eastern & Indian sources,” Vortexa chief economist David Wech said in a note to clients.
“With the Rhine water level decline, the market is struggling to place barrels where they are currently needed the most – in central Europe.”
In total, Europe’s diesel imports stood at 1.76 million barrels a day in the first 17 days of August, Vortexa told Insider. That’s up from 1.52 million in July as a whole, and 1.4 million in June.