ADDIS-ABABA, Aug 31 – Asia diesel exports to Africa are expected to reach their highest level in at least four and a half years in August, as African buyers turn to Asian suppliers following a sharp drop in diesel shipments from the Middle East.
Data from ship trackers and trade sources showed that Asia, including India, is expected to ship between 1.8 million and 2 million metric tons of diesel to Africa this month, equivalent to about 13.4 million to 14.9 million barrels.
The increase comes as the U.S.-Iran war disrupted Middle East exports, while Iran-aligned Yemeni Houthis imposed a blockade on Saudi Arabia in the Red Sea and attacked Saudi Aramco’s Jazan refinery. The disruption has contributed to a fall in Saudi diesel shipments to African markets.
Middle East diesel exports to Africa are estimated at between 600,000 and 800,000 tons in August, the lowest level in almost nine years, according to data from LSEG, Kpler and a trade source. Shipping risks around the Bab el-Mandeb and Strait of Hormuz have continued to affect supplies.
Africa relied on the Middle East for about 50% of its diesel imports last year, according to Kpler data, with Saudi Arabia accounting for about 40% of those supplies. Saudi exports have also been affected by lower refinery runs at some Saudi Aramco facilities, including Jazan. Shipments from the Jazan refinery to Africa fell to zero in August, compared with 163,000 tons in July.
At the same time, traders have been sending more diesel cargoes to western markets because of a wider east-west price spread. The spread between front-month ICE gasoil and 10ppm sulphur gasoil swaps widened to minus $135 per ton in August, from minus $100 in July.
Oil analysts at Energy Aspects say East Africa would likely continue sourcing diesel from Asia if Saudi tankers avoid the Bab el-Mandeb because of security risks, while Europe has limited room to supply the region under current market conditions.
Asian diesel supplies are also improving as refinery runs recover and China resumes exports, which could keep shipments to Africa viable in the near term.
Asian refiners’ diesel margins averaged $66 a barrel in August, up from $61 in July, encouraging refineries to increase output.
Meanwhile, the Singapore diesel cash premium fell to about $4 a barrel, its lowest level in a month, as more spot supplies became available.
