Diesel arbitrage: why freight has shut the Europe import window

AI Summary

High freight rates for prompt US Gulf Coast cargoes have closed the arbitrage window for diesel exports to Europe, despite the price relationship between the two markets. Rates have eased from their recent peak, but freight costs remain central to the trade flow and supply outlook.

Freight, not relative diesel prices, has closed the US arbitrage into Europe. Rates for prompt US Gulf Coast cargoes have climbed from around 250 to over 400 worldscale, closing the arbs, before settling lower in recent sessions to come closer to an equilibrium. That does not mean supply stops. Supply is being pulled by relative ...