Key facts
- Low Rhine water levels have significantly reduced inland shipping capacity.
- German fuel buyers are increasingly sourcing from the Miro refinery in Karlsruhe due to supply constraints.
- Wholesale fuel prices in the Rhine-Main region have risen sharply, particularly for gasoline.
- Freight rates for barge transport along the Main and Upper Rhine have increased substantially.
- A fire at BP's Gelsenkirchen refinery impacted a diesel desulphurisation unit.
Low water levels on the Rhine River have severely impacted inland shipping capacity, leading German fuel buyers to increasingly source from the Miro refinery in Karlsruhe. The restricted navigation has driven up freight rates and wholesale prices, particularly for gasoline, in western Germany.
The river's level at Kaub limited vessels on routes from the Amsterdam-Rotterdam-Antwerp (ARA) hub to the Main and Upper Rhine to under 20% of normal cargo capacity in the week to July 17. This has led to a surge in demand for barge space and a sharp rise in freight rates for destinations along the Main and Upper Rhine.
These supply constraints and rising transport costs have pushed wholesale prices in the Rhine-Main region higher than in other German areas. Traders report tighter product availability, especially for gasoline. The 310,000 b/d Miro refinery in Karlsruhe is operating at high rates, and its suppliers have raised prices less significantly than those at barge-supplied terminals. Some traders are accepting longer hauls from Karlsruhe due to competitive procurement, despite higher logistics costs.
Demand for heating oil remains weak. Diesel demand is supported by seasonal agricultural and construction needs, though end-users are deferring purchases where possible. Prices saw a sharp increase early in the week due to higher Ice gasoil futures, which climbed by nearly $90/t on July 14 after the US government announced a resumption of its blockade policy towards Iran in the Strait of Hormuz. Heating oil and diesel prices in Germany subsequently rose by up to €11.40/100l.
Separately, a fire at BP's 251,000 b/d Gelsenkirchen refinery last week shut a diesel desulphurisation unit. However, local traders noted that diesel and gasoline loadings had already been halted for pipeline maintenance since July 13, meaning the unit outage initially had no additional market effect.