There is a run on fuels such as diesel and heating oil in the southern parts of Germany as supplies are constrained due to critically low water levels on the River Rhine, the German unit of refiner OMV told Bloomberg on Thursday.
The Rhine River, which runs northwest from Switzerland through Germany, France, and the Netherlands into the North Sea, is a major petroleum product transportation corridor in Europe. Due to heat waves and drought this summer in Europe, the levels on the river are low and have now become too shallow for many barges shipping petroleum products to pass.
The German unit of Austria-based OMV has a refinery in southern Germany and told Bloomberg in an emailed response to questions that it “is observing a current run on heating oil and diesel.”
According to OMV Germany, the scramble for fuel supply is possibly the result of “crisis-driven market shortages and thus excessive speculation and stockpiling.”
Due to the low levels on the Rhine, OMV Group has ramped up fuel imports via the Danube River tenfold, the company said at the end of last month.
Low water levels on the Rhine has recently prompted Switzerland to release oil from its emergency reserves as it lowered the obligatory levels of petroleum stocks by 6.5%.
Switzerland gets petroleum supplies via two key routes—via the Rhine and through railway transport. Low water levels on the Rhine have led to a drastic reduction in the amount of products shipped on the river, while the cross-border railway traffic to Switzerland is seeing massive cancellations and delays due to a lack of personnel and ongoing repair works, the government said on July 22. The previous time Switzerland reduced the mandatory threshold of petroleum stocks was in the summer of 2018, which was also a very dry summer and transport capacity on the Rhine was also severely reduced.
By Charles Kennedy for Oilprice.com
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