European gasoil supplies remained tight in October 2026 as disruption to inland shipping and depleted inventories offset refiners’ efforts to increase middle distillate production, according to Alkagesta Market Insights. Its 21 October outlook described volatile prices across Northwest Europe and the Mediterranean, with physical differentials supported against front-month ICE Low Sulphur Gasoil futures.
Rhine water levels at Kaub fell to 1–2 cm on 6 and 8 October, severely restricting barge deliveries to Germany and Switzerland, Alkagesta said. Levels subsequently hovered around 7–18 cm, leaving vessels unable to load normally. Distributors and consumers largely bought only for immediate needs. Differentials for 50 ppm gasoil, used as heating oil in both countries, moved from a $26.75/mt discount to front-month futures early in October to a $10.75/mt premium by mid-month.
Inventory cover offered limited protection against further disruption. Alkagesta put ARA middle distillate stocks at 2.255 million mt, 20% below the five-year average, while gasoil/diesel inventories stood at 1.664 million mt, down 21% year on year. The middle distillate shortfall had nevertheless eased from the 25% deficit reported in its earlier European ULSD outlook. Planned secondary refinery maintenance was expected to constrain further improvements in middle distillate yields despite elevated primary refinery utilisation.
Seaborne supply was also affected by higher transport costs. Alkagesta reported that Arab Gulf-to-UK/Continent LR1 freight averaged $156.01/mt in September before reaching $220.77/mt on 19 October, compared with $46.41/mt a year earlier. Clean product volumes shipped on LR2 tankers declined 28% year on year to 2.1 million b/d over the first nine months of 2026. Middle distillate shortages east of Suez and low European stocks drew US Gulf Coast gasoil cargoes towards Northwest European and Mediterranean ports, supporting MR1 vessel utilisation.
Alkagesta expects delayed heating oil purchases in Germany and Switzerland to concentrate spot demand as temperatures fall, adding pressure on prompt 50 ppm and 0.1% gasoil supplies. It also expects Rhine restrictions to continue until sustained rainfall restores water levels, keeping inland distributors reliant on more expensive rail and pipeline transport into the winter heating season. The outlook identifies prompt supply interruptions and early cold weather as particular risks for European gasoil prices.