European gasoil supplies remained tight in October 2026 as disruption to inland waterways and low inventories offset refiners’ efforts to increase middle distillate production, according to Alkagesta Market Insights. Its 21 October assessment described volatile prices across Northwest Europe and the Mediterranean, with transport constraints supporting physical differentials against front-month ICE Low Sulfur Gasoil futures.
The Rhine bottleneck restricted deliveries to Germany and Switzerland. Alkagesta reported water-level readings at Kaub of just 1–2 cm on 6 and 8 October, followed by levels around 7–18 cm. Distributors and end-users bought only what they immediately needed rather than committing to bulk purchases. Barge differentials for 50 ppm gasoil, used as heating oil in both countries, moved from a $26.75-a-tonne discount to futures early in October to a $10.75 premium by mid-month.
Inventory buffers offered limited protection. Alkagesta put ARA middle distillate stocks at 2.255 million tonnes, 20% below the five-year average, while gasoil and diesel inventories totalled 1.664 million tonnes, down 21% year on year. The middle distillate shortfall had nevertheless eased from the 25% deficit recorded in its earlier European ULSD outlook. Planned secondary refinery maintenance was expected to constrain further improvements in middle distillate yields despite high primary refinery utilisation.
International freight costs added to the supply pressures. According to the assessment, clean product volumes transported by LR2 tankers fell 28% year on year to 2.1 million barrels a day in the first nine months of 2026. Arab Gulf-to-UK/Continent LR1 freight reached $220.77 a tonne on 19 October, compared with $46.41 a year earlier. Low European stocks and middle distillate shortages east of Suez drew US Gulf Coast gasoil cargoes towards Northwest Europe and Mediterranean ports, supporting MR1 tanker utilisation.
Alkagesta expects postponed heating oil purchases in Germany and Switzerland to produce a concentrated increase in spot buying as temperatures fall. It also expects Rhine restrictions to continue until sustained rainfall restores navigability, leaving inland distributors dependent on more expensive rail and pipeline logistics into the winter heating season. The assessment, based on internal analysis and public information, cautions that its forecasts remain subject to changing market conditions.
Read the original announcement on Alkagesta.