Asia's diesel exports to Africa jump in August, replace Mideast supply, data shows

• Middle East previously supplied 50% of Africa's diesel imports, with Saudi Arabia accounting for 40% of that share; Saudi Aramco's Jazan refinery exports to Africa fell to zero in August from 163,000 tons in July
• East-west price spreads widened to minus $135 per ton from minus $100 in July, making arbitrage trading economically viable for Asian exporters above $100 per ton discounts
• Asian refiners' diesel margins improved to $66 per barrel in August from $61 in July, supported by recovering refinery runs and resumed Chinese exports, ensuring continued supply availability

Summary

Asia's diesel exports to Africa are projected to reach 1.8-2.0 million metric tons (13.4-14.9 million barrels) in August, marking a 4.5-year high, as African buyers seek alternative supplies amid disruptions to Middle Eastern shipments.

Key Developments:

Middle East diesel exports to Africa plunged to 600,000-800,000 tons in August, the lowest level in nearly nine years. This represents a dramatic shift from 2023, when approximately 50% of Africa's diesel imports came from the Middle East, with 40% originating from Saudi Arabia alone.

The supply disruption stems from ongoing regional conflict and Houthi-imposed blockades on Saudi Arabia in the Red Sea, including attacks on Saudi Aramco's Jazan refinery. Shipments from Jazan to Africa dropped to zero in August from 163,000 tons in July.

Market Dynamics:

The east-west arbitrage opportunity widened significantly, with front-month spreads expanding to minus $135 per ton in August from minus $100 in July, making Asian exports more economically viable. Asian refinery diesel margins improved to $66 per barrel in August versus $61 in July, encouraging maximized production output.

Increased refinery runs across Asia and resumed Chinese exports have bolstered regional supply availability. However, Singapore's benchmark diesel cash premium has cooled to approximately $4 per barrel due to rising spot availability.

Outlook:

Analysts expect the Asia-to-Africa arbitrage to remain viable near-term, particularly as European supplies remain constrained and shipping risks persist through the Bab el-Mandeb and Hormuz straits. East Africa will likely continue relying heavily on Asian supplies while Saudi tankers avoid high-risk Red Sea routes.