Increased export
The EU has banned Indian oil companies due to buying oil from Russia. But despite this, the country has increased its export to Europe. Data from the tiptrakers and trade sources revealed on Thursday that India’s Diesel Export to Europe in September probably reached the highest level so far, as traders earned a good profit in the West during the refinery maintenance season. Data from LSEG, Capler and two trade sources showed that in September, Europe has been exporting 13 lakh to 14 lakh metric tonnes i.e. 97 lakh barrels from Major Swing Suppliers in Asia.
Shiptracking data has shown that for the first time after such data recorded in 2017, India’s export to Europe has reached these levels. Refiners of India, who take nearly one-third of crude oil from Russia, are increasing their production and sending overseas to surplus products, gasoline and diesel exports have reached the highest level of many years. Capler Shiptracking data has shown that Total Diesel Export in September also remained at the high level of five years of about 3 million tonnes. East-West spread increased FlSEG pricing data showed that the East-West spread average of diesel in September was $ 45 per metric ton, which was less than $ 30 in August. This gave traders incentive to take this product to Europe.
Why record exports?
Traders said that due to refinery maintenance, there has been strength in European prices due to reduced diesel supply. Two sources reported that in Europe, the crude oil processing capacity ranging from around 550,000 barrels per day to 600,000 barrels per day is expected to be closed in October, which was around 400,000 barrels per day in September. The data of two ship brokers has shown that the shipping cost has also decreased by about $ 10 per ton.
The data has shown that the cost of sending 90,000 tonnes of refined fuel on the India-Europe route declined to $ 3.25 million to $ 3.5 million in the second half of September, while the cost from August to September start from $ 4 million to $ 4.2 million. In India’s exports to Europe, the insurance has reduced the supply in Asia, causing the cash premium of 10-PPM sulfur gasoil to be around $ 1.50 per barrel, which is the highest in two months.
There will be shortage in October
However, Vortex’s Asia-Pacific Analysis Head, Ivan Mathews, said that he estimated that there will be a monthly drop in India’s Transport Fuel Export in October due to inspection in domestic demand during the Diwali festive season. He further stated that in the event, it can be expected drop limited in exports as the product crack is higher than last year’s summer, which can insignitize export-oriented refiners in India to focus more on margin and can boost some export cells.
Traders are costers over the quantity of diesel on the India-Europe Trade Route, as the 18th Sanction package of the European Union, which banned the dearly refined products from Russian oil, does not have a detailed information on what will be impaired on the fuel export of India. Two trading sources reported that quantity can be easily replaced by barrels of Middle East Origin, which are easily available.