The article is part of the report Transportation Market 2024/2025: Conclusions, Forecasts, Challenges. Need more information?
The events of recent months have created significant challenges for both the political and economic situations in Europe. As of this writing, the future course of the conflicts in Ukraine and the Middle East remains uncertain. There is growing discourse regarding an impending economic crisis and associated challenges, which are not only being experienced in our region but also in China. The prices and demand for motor fuels are the most sensitive indicators of market health. The current state of the fuel market is somewhat ambiguous. Various factors are affecting the forecasts.
China Fails To Take Off
The price of diesel fuel is derived from the situation in the oil market. In the context of 2025, the raw material is subject to a series of events and phenomena that may result in a decline in prices. These include the potential impact of Donald Trump’s presidency on US exports, adjustments to OPEC production limits, and the possibility of an economic slowdown in Europe.
It is also crucial to be mindful of the softening demand from China’s economy. The country has encountered challenges in meeting its crude import expectations since the pandemic, and oil use has fallen short of projections. Chinese authorities are implementing measures to stimulate demand through state programs, though their effectiveness remains moderate at this stage. This suggests that 2025 may be a year of decline in comparison to the previous year.
According to a recent Reuters poll of analysts, the average price of Brent crude is expected to be $74.53 per barrel next year. Experts have lowered their price forecasts for the seventh consecutive month. Weaker global demand growth and sufficient supply will offset the effects of a potential delay in OPEC+ easing of production limits. Such conditions may also indicate similar changes in the finished fuels sector, including diesel.
HVO Increasingly Important For Transportation
The US Energy Information Administration (EIA) has revised its forecast for renewable diesel production in 2025, as outlined in the latest Short-Term Energy Outlook report, released on October 8. The EIA is currently forecasting that renewable diesel production will average 210,000 barrels per day in 2024 and 230,000 barrels per day in 2025, compared to last month’s forecast of 240,000 barrels per day. In 2023, the average production of renewable diesel was 170,000 barrels per day.
When analyzing the European market, it is important to consider the situation in Germany. At the end of May 2024, Germany authorized the unlimited sale of HVO at gas stations, and the first major investment in domestic stand-alone HVO production was announced at the Holborn refinery in Hamburg. According to an analysis by Hagen Reiners of Argus German Fuels, Germany consumes approximately 33 million tons of diesel per year. Global HVO production is expected to reach 22 million tons in 2024. Since the majority of production is centered in North America, the general availability of HVO may also be a limiting factor in Germany’s significant transition from diesel to HVO.
German distributors estimate that HVO 100 sales in Germany reached 50,000 to 60,000 tons in 2023. This is significantly less than the diesel consumption in Germany, but importers are reporting a significant increase in rates this year. The popularity of these solutions and the tightening of European requirements for clean transportation will be key factors in this regard. In this context, HVO will be of high importance due to its applicability to traditional diesel engines.
33 Million Tons Of Diesel Fuel
That’s how much Germany consumes per year. Global HVO production is expected to reach 22 million tons in 2024. Since the majority of production is centered in North America, the general availability of HVO may also be a limiting factor in Germany’s significant transition from diesel to HVO.
