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DIESEL: Economic Headwinds and Structural Demand Decline Weigh on EU Margins

DIESEL
Energy BulletsCEEMEABulletCommodities

The European diesel refining margins are under downward pressure weighing economic headwinds, a structural demand decline and refinery closures expected in the new year, Argus said.

  • Margins in Europe have fallen below $17/bbl from $28.53/bbl in 2023 and $37.27/bbl in 2022. The IEA does not expect a return to the post pandemic high margin environment.
  • Diesel consumption in Germany is down 4% in 2024 and in France down 3%. Any European economic improvement in 2025 will likely provide a tailwind for outright diesel.
  • Increased electric and hybrid vehicles is causing a systemic decline in diesel usage. Delays to outright national bans may stem the decline, but the trend is unlikely to be reversed.
  • The 150kb/d Grangemouth refinery halt, 147kb/d Wesseling end to crude processing and 257kb/d Gelsenkirchen crude unit and a middle distillate desulphurisation unit halt could help to rebalance the market. The start of 10ppm diesel production at Nigeria's 650kb/d Dangote refinery could offset the lost capacity.
  • Profitability of key arbitrage routes from the US Gulf coast, the Mideast Gulf and India may impact European diesel prices in 2025.
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The European diesel refining margins are under downward pressure weighing economic headwinds, a structural demand decline and refinery closures expected in the new year, Argus said.

  • Margins in Europe have fallen below $17/bbl from $28.53/bbl in 2023 and $37.27/bbl in 2022. The IEA does not expect a return to the post pandemic high margin environment.
  • Diesel consumption in Germany is down 4% in 2024 and in France down 3%. Any European economic improvement in 2025 will likely provide a tailwind for outright diesel.
  • Increased electric and hybrid vehicles is causing a systemic decline in diesel usage. Delays to outright national bans may stem the decline, but the trend is unlikely to be reversed.
  • The 150kb/d Grangemouth refinery halt, 147kb/d Wesseling end to crude processing and 257kb/d Gelsenkirchen crude unit and a middle distillate desulphurisation unit halt could help to rebalance the market. The start of 10ppm diesel production at Nigeria's 650kb/d Dangote refinery could offset the lost capacity.
  • Profitability of key arbitrage routes from the US Gulf coast, the Mideast Gulf and India may impact European diesel prices in 2025.