Key facts
- Rhine oil barge freight rates have reached an all-time high.
- Low water levels have made the Kaub bottleneck practically impassable.
- The Upper Rhine and Main River are effectively cut off from the Amsterdam-Rotterdam-Antwerp (ARA) trading hub.
- Water levels at Duisburg are predicted to hit a historic low, impacting the Gelsenkirchen refinery.
- Price discrepancies are increasing between western German import hubs and refinery locations.
Freight rates for barges transporting oil products on the Rhine River have surged to record levels due to critically low water levels at the Kaub bottleneck, rendering most resupply operations uneconomical or impossible. The Kaub bottleneck, a key chokepoint on the Rhine, has fallen below the critical 30cm mark, preventing passage for most inland barges.
This situation effectively cuts off the Upper Rhine and Main River from the Amsterdam-Rotterdam-Antwerp (ARA) trading hub, impacting supplies to Switzerland as well. Barge loading operations on the Lower Rhine are also at risk of suspension as water levels are forecast to reach historic lows at Duisburg by the end of the week. This could make shipments to the 251,000 b/d Gelsenkirchen refinery impossible or uneconomical.
Shipowners have been increasing freight rates since mid-June, with significant acceleration in July. Rates to Duisburg, Frankfurt, and Karlsruhe are now at their highest since assessments began in 2012. While rail transport is considered an alternative, available capacity is scarce, further tightening supply options.
The disruption has led to significant price increases at import hubs in western Germany compared to refinery locations. Suppliers at the 310,000 b/d Miro refinery in Karlsruhe are lowering prices for truck loadings of heating oil, diesel, and gasoline to manage excess inventory. Gasoline is becoming increasingly difficult to source on the spot market in the Rhine-Main region and western Germany, with many suppliers withdrawing due to insufficient blending components.