The cost of shipping diesel and other fuels to Europe from the U.S. Gulf has surged in recent days amid signs of an increase in exports from America’s key refining hub.
Freight rates for the benchmark oil-product tanker route from the U.S. region to northwest Europe on Thursday reached the highest level since May, Baltic Exchange data show. In the past two weeks they’ve jumped almost 80%.
“With the end of peak refining maintenance season in the U.S., more cargoes are available for export,” said Richard Matthews, head of research at E.A. Gibson Shipbrokers Ltd. in London.
Fuel demand has picked up amid recovery from the pandemic, with U.S. refiners last week reaping their highest profit margins for the time of year since 2017. Europe’s imports of refined products from the Americas also gained marginally in October — largely due to U.S. Gulf shipments — tanker-tracking data compiled by Bloomberg show.
The recent rate surge coincides with a sharp increase in inquiries for chartering tankers in the U.S. Gulf region. Provisional bookings jumped to about 18 tankers on Nov. 2, according to fixture reports compiled by Bloomberg. Comparatively, only three tentative bookings were observed from the region on Oct. 20.
Trans-Atlantic trade flows from Europe to the Americas had also declined in October to the lowest in a year, further restricting the availability of ballast tankers near the U.S. Gulf.
“Tanker rates in the region have been so low for so long, that shipowners were avoiding the region, which reduced the supply of ships there,” Matthews added.