TThe prospect of improving shipping rates over the next few months is looking increasingly likely over the next few months. In its latest weekly report, shipbroker Gibson said: “With the Middle East crisis at the forefront of everyone’s minds, the second supply shock has passed somewhat more slowly under the radar. However, when on July 8 Russia banned diesel exports for the rest of the month, a large share of the world’s seaborne diesel supplies were suddenly removed, tightening an already weak market. Some supplies will continue to flow into the market, as supplies under pre-existing government agreements will be exempt from the price.” The result is that diesel refining margins will rise to record levels in US and Europe, while in the East, refining margins rose but have not yet returned to the high levels seen in March.
According to Gibson, “‘Long-term sanctions’ on Ukraine have been a notable success in recent months. Reports suggest that drone strikes have disrupted more than 40% of Russia’s refining capacity, with all 11 of its major refineries being hit at least once. In a striking reversal for a major exporter, Moscow will now import fuel to supply its market, having reportedly secured shipments from neighboring countries as well as further afield. The export ban is likely to accelerate the already evident decline in Trade flows: In June, CPP exports were about 750,000 bpd versus an average of 1,250,000 bpd for the whole of 2025. Most of this decline was in diesel exports, which amounted to about 800,000 bpd in 2025. Trade data shows a gradual decline in CPP exports to main destinations, namely Turkey, Brazil and North Africa.
Source: Gibson Shipbrokers
“These lost barrels cannot be easily replaced,” the shipbroker added. Renewed escalation in the Middle East and new attacks around the Strait of Hormuz have set back any recovery in Gulf CPP exports in the Middle East. Furthermore, recent Iranian threats to “other export corridors” and renewed Houthi involvement in the conflict have increased the risk of potential disruption to Bab al-Mandab transit operations as well as refining and export operations at Yanbu, a major alternative source of diesel and jet fuel. Exports of Chinese products are increasing. Uncertainty Reports of additional quota volumes coming into the market for July, followed by a decline, leaving the market hoping for a respite in August, which was the main source of additional CPP volume in Q2, looks less able to fill the gap this time Refinery utilization has reached seasonal highs, but lower inventories, strong domestic demand and a refinery maintenance season later this year all point to lower availability for export in the near term. Oil restrictions may need to be considered easing if domestic prices become tighter. Too high, and that may require the release of more spare oil reserves from countries in Europe, as well as Japan and Korea, to bring more refined products, especially diesel, back to domestic markets. However, any releases are likely to be smaller and more targeted this time, given concerns about depleted stocks.
“Currently, the ban is only in effect for one month,” Gibson concluded. “Domestic demand for diesel for harvest purposes rises seasonally in late summer and early fall, raising the risk of the ban extending beyond July. If it continues for longer, the most exposed buyers, namely Turkey, Brazil and countries in North Africa, may have difficulty obtaining replacement barrels. Another consideration for the clean tanker market is that ships currently involved in the Russian CPP trade may try to return to the main market. On the positive side, product pricing fluctuations could lead to a widening of prices,” Gibson concluded. It leaves room for freight rates to rise, as we saw in the second quarter. Additional uncertainty comes from lower crude oil flows through Hormuz due to the recent escalation, and whether Asian refiners in particular are able to secure enough feedstock for August and beyond. Overall, seaborne CPP flows are expected to remain under pressure with two of the top three diesel exporters facing export restrictions, and the government’s ability to make up shortfalls using Strategic Petroleum Reserve barrels has diminished compared to the start of the war.”
Nikos Rousanoglou, Global Hellenic Shipping News
