Nigeria supplies kerosene to Europe: Why oil is flowing through Hormuz again, but hardly any diesel

Transporting oil through the Strait of Hormuz is expensive and dangerous, but has become increasingly possible again in recent weeks. The situation is different when it comes to fuels such as diesel and kerosene, which Europe has to import.

More than seven months after the start of the Iran war, crude oil exports from the Persian Gulf have partially returned to normal. Given the ongoing attacks on tankers in the Strait of Hormuz, this normality is expensive and dangerous. But the amount of oil that reached the world market from the Gulf region was in some cases almost back to pre-war levels in September. According to data from the price reporting agency Argus Media, transports through the Strait of Hormuz, which is still closed by Iran, reached 65 percent of the pre-war volume. In addition, there are greatly increased transports on alternative routes such as the Saudi east-west pipeline or the pipeline from Abu Dhabi to the Gulf of Oman.

However, these routes are expensive. Before the war, oil tankers sailed directly from the ports on the Persian Gulf to all over the world. Recently, however, only a few ships crossed the Strait of Hormuz as shuttles at enormous risk. In the Gulf of Oman they load their oil from ship to ship onto other tankers, which then take it to destination ports in Asia or Europe. The costs for this are many times higher than before the war.

The situation is completely different with refined fuels. Before the war, the Gulf states and their refineries were important suppliers to Europe, especially diesel and kerosene. Unlike crude oil, transport volumes for refined products have barely recovered. In September, tankers transported only about a quarter of the volume of fuel and other oil products through the Strait of Hormuz compared to prewar levels.

According to Argus expert Sarah Raffoul, this is because fuels are hardly suitable for ship-to-ship transfers, which play a major role in crude oil exports in light of the war. One of the reasons for this is that possible contamination is more problematic for refined products than for crude oil. At the same time, unlike crude oil, there are no pipelines available as alternative transport routes from the Gulf to world markets.

The result is a shortage of supply, particularly for diesel and kerosene, on the global market, which is also causing prices to rise at gas stations in Germany. The fuel supply bottleneck, according to analyst Raffoul, is no longer just the disruption of refining capacity, but rather the limited opportunity, compared to crude oil, to "replace Hormuz as an export route for refined products."

Nevertheless, the feared kerosene shortage in Europe has not yet materialized. Many experts, including the head of the International Energy Agency Fatih Birol, warned of this in the spring after the start of the Iran war. But Europe was able to secure kerosene from Asia and the USA, and increasingly from Nigeria, to replace the lack of deliveries from the Gulf.

Nigeria's Dangote refinery, Africa's largest, has more than doubled its exports to Europe in recent months. The Argus expert for the European kerosene market, Aamar Khan, estimates that the country could become "Europe's most reliable supplier of kerosene since the beginning of the Iran war."