Refined petroleum products shipments to Europe from Kuwait see decline

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KUWAIT CITY, Jan 18: Standard & Poor’s Global Commodities at Sea has confirmed a surge in pressure on shipowners to avoid the Red Sea, significantly impacting Europe’s imports of refined petroleum products in the first half of January.

This is evident in a notable decline in destined petroleum product shipments to Europe from Saudi Arabia by 15%, from India by 31%, and from Kuwait by 43%, surpassing December’s levels.

Analysts cited by the agency noted that although imports of US oil products helped compensate for shipments from East Suez, an upcoming maintenance phase is expected to further deplete the already low stock of the European market.

Initially, tanker shipments seemed resilient against the escalating security threat in the Suez region, but major oil companies such as BP, Shell, and Reliance have taken the initiative to reduce their shipments in the area.

The agency disclosed that Europe imported an average of 2.3 million barrels of petroleum products from outside the Suez region in the first half of January, representing a decrease from December’s imports, which totaled 2.9 million barrels.

The decline in European imports poses a significant threat to diesel supplies, as about a third of Europe’s diesel imports come from the Middle East. With European stocks decreasing by 257 thousand barrels below their average in the past five years, the threat is heightened.

While higher imports from the United States provided some buffer, reaching 237 thousand barrels per day in January (down from 246 thousand in December), expectations of shipments of 416 thousand in January of diesel and fuel oil from the United States to Europe — the highest level in 6 years—are anticipated to offer relief in the coming weeks.

On the other hand, early January loadings suggest that deliveries from the East Suez region will further decline. India has not loaded any refined products for export to Europe, disrupting the usual flow of diesel and gasoil that Europe has grown accustomed to. Indian flows redirected to the Gulf region and other areas in Asia, while companies such as Reliance appear to be avoiding rising shipping costs, having exported all their gas oil to Europe in 2023.

The data indicates that about 24% of India’s gas oil exports headed to the Gulf region in the first half of January, marking a 19% increase from December.

Meanwhile, Saudi Arabia’s shipments to Europe averaged 147,000 barrels per day in the first half of January, down from 293,000 in December, and Kuwait’s shipments to the region fell to 28,000 after reaching 147,000. These developments could expose European insurance fees to pressure, urging them to secure larger quantities of petroleum products.

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