Europe’s Ailing Diesel Demand to See Boost From New Rule on Shipping Pollution

(Bloomberg) —

A new rule aimed at cutting pollution from shipping in the Mediterranean is set to help prop up Europe’s ailing diesel demand.

The regulation will result in an increase of 44,000 barrels a day in demand for a type of diesel fuel known as marine gasoil next year, according to Eugene Lindell, head of refined products at consultancy FGE.

Starting in May, the maximum sulfur content allowed in propellants used by vessels traversing the Mediterranean will be slashed from 0.5% to 0.1%. Marine gasoil is much less polluting than the fuel ships are currently allowed to run on — although still significantly dirtier than the diesel used in European cars.

Europe’s overall diesel consumption is under long-term pressure from a declining share of the European Union car fleet. A mild winter and weakness in the manufacturing sector has also weighed on demand for the fuel this year.

While the new rule will support Europe’s overall diesel demand, it won’t be enough to stop the downtrend, Lindell said. FGE expects total consumption across Europe to still fall by an average 30,000 barrels a day in 2025, following a drop of 140,000 barrels a day this year.

FGE’s forecast for 44,000 barrels a day of additional demand in 2025 refers to an annual average increase in 0.1% sulfur marine gasoil consumption in OECD Mediterranean countries and Gibraltar.

© 2024 Bloomberg L.P.

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