European diesel prices and refining margins have collapsed in recent days to six-year lows as the market has been overwhelmed by imports from huge refineries in the United States, Russia, Asia and the Middle East. As a result, the European storage capacity has been saturated. So, tankers laden with diesel heading from the U.S. Gulf Coast to Europe are turning back in mid-ocean. One of the three vessels has returned in recent days and is now heading back to west.
A vessel which was more than three quarters of the way to Europe, turned around just 800 miles off the coast of Portugal. Ship brokers opine that a turnaround so late in the journey would come at a cost to the charterer. Mild temperatures in Europe and North America, limited demand for diesel and heating oil, are putting even more pressure on the market.
Traders have stored at least 250,000 tonnes of diesel on tankers which are currently anchored off Europe and the Mediterranean seeking a discharge port.