Record high gasoline and diesel prices in the United States are drawing a growing flow of tankers from Europe, where pump prices are lingering near record highs.

So far in May, Europe has exported around 540,000 barrels per day of gasoline on the transatlantic route, close to the highest level since July 2019, data from oil analytics firm Vortexa show.

And gasoline exports from Europe to the U.S. East coast are expected to rise to their highest in at least three years in May, according to industry sources.

Traders regularly move oil on tankers between regions to where they can make a bigger profit, in what is known as an arbitrage.

But the rapid shift in oil flows around the world since Moscow’s invasion of Ukraine on Feb. 24 has rarely been as stark as when Europe has scrambled to replace Russian crude oil and refined products.

Most European refiners and oil traders including BP BP.L, TotalEnergies TTEF.PA and Shell SHEL.L responded to the invasion by severing ties with Russia and sharply cutting back purchases of oil from Russia, which accounts for a quarter of the continent’s consumption.

Concerns of fuel shortages recently pushed diesel and gasoline prices to record highs, leading refineries to ramp up output and traders to ramp up imports.

UK petrol and diesel prices hit new records on Tuesday, according the RAC motoring organisation. At the same time, the European supply situation appears more stable than in the U.S, as imports of Russian diesel have yet to fall off the cliff.

“The first spike we saw in diesel profit margins following the invasion was on the expectation that diesel would completely dry up but that hasn’t really happened,” said Koen Wessels, an analyst at consultancy Energy Aspects.

“At the moment the diesel balances in Europe look relatively good for the second quarter.”
Benchmark European diesel refining margins, or cracks, have dropped by over 60% from a record high of nearly $90 a barrel hit on Mar. 10, according to Reuters data.

In a sign of the stabilizing supply picture in Europe, at least one tanker carrying a cargo of diesel, Lunaria, which headed from the Saudi Red Sea port of Yanbu to Europe has been diverted in recent days to the United States, according to Refinitiv ship tracking and traders.

Meanwhile, diesel and gasoline prices in the U.S. have shot up in recent weeks to record highs as stocks plummeted.

The American Automobile Association (AAA) said on Tuesday that gasoline pump prices exceeded $4 per gallon in all U.S. states for the first time.

“Though US refinery processing tends to pick up again from May, product markets are likely to remain tight in the short term,” Commerzbank analyst Barbara Lambrecht said in a research note.

In response, traders have started ramping up gasoline exports from Europe to the U.S. East Coast.
Source: Reuters (Reporting by Ron Bousso and Rowena Edwards; Editing by Bernadette Baum)