HomeIndustriesEuropean Diesel Shortage Looms as Winter Approaches

European Diesel Shortage Looms as Winter Approaches

European diesel storage levels are hovering at a seasonal low as the continent braces for the coming winter months. This could pose a major crisis for Europe, especially since diesel, heating oil, and gasoil are essential energy sources used to power factories and heat homes, in addition to being used as motor fuel.

Supply levels were significantly reduced after EU sanctions on Russian crude oil and refined product supplies came into effect. Russia, which invaded Ukraine on February 24 this year, supplied up to 60% of Europe’s total imports. As a result, the sanctions led to a major supply shortage in the diesel market, driving a major price surge.

With current diesel prices trading at a premium rate, it has become impractical for traders to put diesel into storage and consequently miss out on an unusually profitable sales period.

Leading the situation to further deterioration is the hot and dry weather being experienced across Europe this summer. This has led to irregularly low water levels on the Rhine river, which is a key waterway used to transport fuel barges from the major Amsterdam-Rotterdam-Antwerp (ARA) hub to France, Germany, and Switzerland. According to consultants at FGE Energy, “A major disruption to an important gasoil/diesel supply route from ARA to inland Europe could not come at a worse time.”

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