India's Diesel Exports fall 45 Percent as Refiners avoid Red Sea
In January 2024, India's diesel exports experienced a significant drop to a multi-year low, following a 17-month high in December 2023. This decline, amounting to over 45 percent, can be attributed to an increasing number of transporters and refiners, including Reliance Industries (RIL), avoiding the Red Sea. According to data from energy intelligence firm Kpler, India exported approximately 302,000 barrels per day (b/d) of diesel last month, compared to the nearly 551,000 b/d recorded in December 2023.
Kpler data shows that clean petroleum product (CPP) exports from India to the US fell to around 47,226 b/d in January 2024 from 85,620 b/d in December 2023. Similarly, cumulative shipments to the UK plus nine countries, including France, Netherlands and Spain, fell to 1,52,010 b/d from 4,25,193 b/d. Analysts and trade sources point out that since January 12 when the US and the UK carried air strikes on Houthi rebel positions along the Red Sea, more refiners are avoiding Bab-el-Mandeb which connects the Red Sea to the Gulf of Aden and accounts for 12 percent of seaborne crude oil and 8 percent of LNG trade. Cape of Good Hope (COGH) is fast emerging as the preferred route.
The US EIA in a February 1 report said “Major oil and natural gas companies that are avoiding the Red Sea include Equinor, which operates mostly natural gas carriers, and BP, which operates both oil and natural gas carriers. As of January 23, 2024, other major energy companies pausing Red Sea transits include Euronav, QatarEnergy, Torm, Shell, and Reliance". S&P Global Commodity Insights in a January 16 report said “S&P Global Commodities at Sea data showed that Indian refiner Reliance, a key diesel/ gasoil supplier to Europe, had loaded no product for export to the continent in the first two weeks of January".
According to Vortexa data, 12 vessels transporting refined products to the US and Europe are utilizing the Cape of Good Hope (COGH) route. The US Energy Information Administration (EIA) has indicated that vessels opting to avoid the Suez Canal can take the longer route around southern Africa via the COGH. A typical journey from the Persian Gulf to the Amsterdam-Rotterdam-Antwerp petroleum trading hub (ARA) through the Suez Canal takes 19 days, but this duration extends to nearly 35 days when navigating through the COGH. In December, the flow of Clean Petroleum Products (CPP) through the Bab el-Mandeb Strait was 30 percent lower than the average for the rest of 2023. The primary routes for petroleum product trade involve shipments from Saudi Arabia and India to Europe and from Russia to Asia, as highlighted by the majority of trade patterns.
In a commentary dated January 30, Vortexa's Freight Analyst Mary Melton noted a modest recovery in northbound Clean Petroleum Products (CPP) tanker transits as the New Year commenced. However, these transits experienced a significant decline after the military strikes led by the US and UK on January 12. “The flow most affected by these northbound diversions are middle distillates from West Coast (WC) India or the Middle East heading to Europe", she added.
Traditionally, larger long-range (LR) tankers have been the preferred vessels for transporting middle distillate cargoes from the Middle East and West Coast India. Since the military strikes led by the US and UK, there has been a substantial 87 percent increase in freight rates for LR1s (TC8) and a 95 percent increase for LR2s (TC20) on the India-to-UK Continent route, as highlighted by Melton. “The transit via COGH instead of via the Red Sea adds around 75 percent in tonne-miles to a voyage from Sikka (Jamnagar in Gujarat) to Europe for both LR1s and LR2s. If all LRs carrying middle distillates from WC India/MEG to Europe were diverted, this would add 8 percent to global LR1 tonne-miles per month and 18 percent to global LR2 tonne-miles per month, significantly increasing global fleet requirements", she said.
Kpler data shows that clean petroleum product (CPP) exports from India to the US fell to around 47,226 b/d in January 2024 from 85,620 b/d in December 2023. Similarly, cumulative shipments to the UK plus nine countries, including France, Netherlands and Spain, fell to 1,52,010 b/d from 4,25,193 b/d. Analysts and trade sources point out that since January 12 when the US and the UK carried air strikes on Houthi rebel positions along the Red Sea, more refiners are avoiding Bab-el-Mandeb which connects the Red Sea to the Gulf of Aden and accounts for 12 percent of seaborne crude oil and 8 percent of LNG trade. Cape of Good Hope (COGH) is fast emerging as the preferred route.
The US EIA in a February 1 report said “Major oil and natural gas companies that are avoiding the Red Sea include Equinor, which operates mostly natural gas carriers, and BP, which operates both oil and natural gas carriers. As of January 23, 2024, other major energy companies pausing Red Sea transits include Euronav, QatarEnergy, Torm, Shell, and Reliance". S&P Global Commodity Insights in a January 16 report said “S&P Global Commodities at Sea data showed that Indian refiner Reliance, a key diesel/ gasoil supplier to Europe, had loaded no product for export to the continent in the first two weeks of January".
According to Vortexa data, 12 vessels transporting refined products to the US and Europe are utilizing the Cape of Good Hope (COGH) route. The US Energy Information Administration (EIA) has indicated that vessels opting to avoid the Suez Canal can take the longer route around southern Africa via the COGH. A typical journey from the Persian Gulf to the Amsterdam-Rotterdam-Antwerp petroleum trading hub (ARA) through the Suez Canal takes 19 days, but this duration extends to nearly 35 days when navigating through the COGH. In December, the flow of Clean Petroleum Products (CPP) through the Bab el-Mandeb Strait was 30 percent lower than the average for the rest of 2023. The primary routes for petroleum product trade involve shipments from Saudi Arabia and India to Europe and from Russia to Asia, as highlighted by the majority of trade patterns.
In a commentary dated January 30, Vortexa's Freight Analyst Mary Melton noted a modest recovery in northbound Clean Petroleum Products (CPP) tanker transits as the New Year commenced. However, these transits experienced a significant decline after the military strikes led by the US and UK on January 12. “The flow most affected by these northbound diversions are middle distillates from West Coast (WC) India or the Middle East heading to Europe", she added.
Traditionally, larger long-range (LR) tankers have been the preferred vessels for transporting middle distillate cargoes from the Middle East and West Coast India. Since the military strikes led by the US and UK, there has been a substantial 87 percent increase in freight rates for LR1s (TC8) and a 95 percent increase for LR2s (TC20) on the India-to-UK Continent route, as highlighted by Melton. “The transit via COGH instead of via the Red Sea adds around 75 percent in tonne-miles to a voyage from Sikka (Jamnagar in Gujarat) to Europe for both LR1s and LR2s. If all LRs carrying middle distillates from WC India/MEG to Europe were diverted, this would add 8 percent to global LR1 tonne-miles per month and 18 percent to global LR2 tonne-miles per month, significantly increasing global fleet requirements", she said.
.jpg "Pixel Web Series: MVPS That Act As Catalyst Of Growth")
