After plunging to the lowest level in a year-and-a-half in January due to the Red Sea troubles, India’s petroleum product exports to Europe registered a swift recovery in February, latest ship tracking data shows. Notably, even as some cargoes did take the seemingly perilous Red Sea route to Europe from ports on India’s west coast, the majority of the tankers took the much longer and costlier, albeit safer, route around Africa via the Cape of Good Hope.

India’s petroleum product exports to Europe in February jumped nearly 124 per cent from January levels to over 295,500 barrels per day (bpd), according to ship tracking data from commodity market analytics firm Kpler. Diesel exports to Europe trebled month-on-month to over 164,600 bpd, while jet fuel exports were 68.5 per cent higher at nearly 131,000 bpd. Europe’s share in India’s petroleum product exports was around 22 per cent in February, against just 12 per cent in January, but still substantially lower than last year’s export spree when 32 per cent of India’s product exports went to Europe.

In January, European buyers appeared inclined towards buying fuels—mainly diesel—from the United States (US) instead of India due the Red Sea crisis. This was primarily because the alternative shipping route around Africa makes the voyage from India to Europe significantly longer, and considerably inflates freight costs as well. However, with supplies from the US hit due to weather-related disruptions and maintenance shutdowns, Europe evidently turned to India.

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“Europe is in a way forced to look at Indian product imports again. European buyers have only started to buy US diesel instead of Indian/Middle Eastern…the cold snap in the US and then the heaviest maintenance schedule in years led to huge gaps in US diesel production, meaning US Gulf Coast refiners could no longer meet Europe’s demand needs. Consequently, India, firing on all cylinders with its own refining…was there to tap into,” said Viktor Katona, Lead Crude Analyst at Kpler.

Of India’s petroleum product exports to Europe in February, nearly 170,500 bpd were shipped via the Cape of Good Hope route, while the rest took the Red Sea route. Prior to the Red Sea security crisis, tankers hauling fuels from India to Europe rarely opted for the longer route around the African continent.

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“Commercially, the Cape of Good Hope (route) is still a suboptimal solution, but for Europe there are not that many options left with Russian diesel sanctioned and other suppliers producing less,” Katona said, adding that given the lucrative economics of the Red Sea trade route, some fuel importers in Europe now seem willing to opt for it despite the associated risks. As per trade sources, taking the Cape of Good Hope route instead of the Suez Canal raises the freight cost by roughly $1 million and adds 15-20 days to the voyage.

Also Read | Red Sea Crisis: India turns to West Asia to replace US oil supply

Over the past two-three months, a number of cargo ships have come under attack from the Iran-backed Houthi rebels of Yemen around the Bab el-Mandeb strait, which leads to the Red Sea and Suez Canal, forming the shortest, albeit narrow, route to the Mediterranean Sea and beyond from the Arab Peninsula, North-East Africa, and the Arabian Sea. The route is seen as an important artery of global goods and energy supplies. The Houthis have so far claimed that they are targetting vessels with links to Israel and its allies in view of its military offensive in Gaza.

The security situation in the Red Sea region has forced a number of major shipping lines and Western oil companies to shun the route and instead take the much longer route around Africa via the Cape of Good Hope. Higher risk premiums and longer voyages have hit movement of goods between Asia and Europe, and Asia and North America in terms of significantly higher freight rates.

India was traditionally not the biggest of fuel sources for Europe, with the continent depending heavily on Russia for energy imports. However, in the aftermath of Moscow’s February 2022 invasion of Ukraine, as Europe started shunning Russian crude oil and fuels, India emerged as the largest buyer of Russian seaborne crude and also a major fuel supplier to Europe with all such shipments passing through the Red Sea. Interestingly, the movement of Russian oil through the Suez Canal-Red Sea route has largely been immune to the prevailing crisis as Russia is perceived as Iran’s ally and the Houthi rebels appear to be backed by Tehran.

Chinese mangoes sold at a fruit store in Ho Chi Minh City. Photo by VnExpress/Hong Chau

Vietnam spent US$2.1 billion importing vegetables and fruits in the first 11 months of this year, up 35.2% year-on-year, the highest ratio in three years, according to a report by the Vietnam Fruit and Vegetable Association.

Of Vietnam’s 10 import markets, China led the surge with an 83% increase, followed by India (67%), South Africa (54%) and Cambodia (33%).

Imports from China reached $765 million to make it the biggest fruit and vegetable exporter to Vietnam, accounting for nearly 41% of the market.

A survey by VnExpress showed that price tags are cheap in Ho Chi Minh City – traditionally imported produce’s best Vietnamese market – for fruits and vegetables from China, India, and Cambodia.

China’s high-quality red grapes with seeds are selling in the southern hub for VND80,000-100,000 ($3.39-4.24) per kg, a price equivalent to their Vietnamese counterparts. Chinese peony grapes are on sale in HCMC for VND170,000-200,000 per kg, which is only a tenth of the cost for similar products from Japan.

Indian red pomegranates cost only VND60,000-70,000 per kilogram, a third of those from the U.S. and Taiwan.

Other produce imported from India and South Africa are also relatively affordable.

Nguyen Hoang Hai, who specializes in selling imported fruits in HCMC’s District 12, said he was receiving more produce at better prices than he had in years.

In particular, Australian oranges, South African apples, and Cambodian mangoes are very popular and sell for less than VND50,000 per kilogram, according to Hai.

He said the low prices help him sell several hundred boxes of imported fruit every day to both wholesalers and retail customers.

A representative from the Thu Duc Agricultural Wholesale Market said HCMC was saturated with imported fruit.

In one of the southern region’s busiest wholesale markets, the sale of attractively-priced fruit imported from Australia, India, Thailand and Cambodia had increased by double digits over the last quarter of 2022 compared to the same period last year.