Tankers that were carrying diesel toward Europe have changed course at sea, as the Iran war boosts prices and intensifies competition for supplies.
Four tankers — the Aliai, Minerva Vaso, Grand Ace6 and Elka Delphi — recently loaded diesel-type fuel in the US and started to cross the Atlantic, according to Vortexa and ship-tracking data compiled by Bloomberg News. The Aliai was signaling Gibraltar, while the other three were showing Amsterdam.
Since then, the ships have all made sharp turns: the Grand Ace6 is now signaling Lome in the West African nation of Togo, while the other three vessels are heading southeast. Combined, they’re carrying about 1.2mn barrels of diesel-type fuel, Vortexa data show.
The tanker diversions come as the Iran war upends global energy supply chains by effectively closing the critical Strait of Hormuz. With markets deprived of millions of Arabian Gulf barrels, fuel supplies are already under severe pressure in Asia, while oil traders and analysts have said that Europe could face shortages in the coming weeks.
Although none of the ships are signaling Asian destinations, diesel prices have soared in that region. Some of these barrels could ultimately be heading for eastern buyers, another sign of how the crisis is rippling through global energy markets.
“Europe’s time will come, but right now it is Asia that is screaming the loudest,” said Philip Jones-Lux, senior oil analyst at energy analytics firm Sparta Commodities, referring to diesel supplies.
Europe may be missing oil product imports, but there’s still plenty of crude around to process, he said. In Asia, crude runs at oil refineries are falling because of a lack of supply, Jones-Lux added.
The European Union and UK are net importers of diesel-type fuel, used to power everything from trucks to construction equipment. One of the region’s main suppliers is India, but exports from the South Asian nation are currently heading elsewhere.
“Over the last week and a half, the diesel barrels coming out of India have all headed towards Southeast Asia,” said Mick Strautmann, a market analyst at Vortexa. “The prices in Asia are much higher than in Europe, pulling these diesel barrels eastwards.”
While some diesel cargoes from the US have diverted away from Europe, many are currently en route, Vortexa data show.
What’s more, the agreement made by International Energy Agency member countries to release oil from reserves will help reduce short-term pressure on supplies — if recent history is any guide, a large chunk of the oil products made available will be diesel.
“For April, overall we will see a sharp drop in imports into Europe,” said George Shaw, an oil analyst at Kpler, referring to diesel-type fuels. “Currently, the bulk of imports will come from the US, as this is the only region that is capable of addressing the deficit.”
Any long-term disruption to shipments from the Baltic port of Primorsk — a major diesel export hub that’s been attacked by Ukraine — would also tighten global supplies.
