Global commodities trader Trafigura loaded diesel onto a supertanker in the Middle East this week, taking advantage of lower freight rates for crude tankers to send more fuel to the West, according to shipping data and several trade sources.

The shipment marks the first VLCC to move diesel in bulk from the Middle East to the West in nearly a year, Kpler data showed, and comes after costs of shipping fuel from Asia to the West jumped.

Attacks by Yemeni Houthis on ships in the Red Sea forced vessels to take a longer route via the Cape of Good Hope, tightening the supply of vessels used to ship clean products such as gasoline and diesel.

The Very Large Crude Carrier Plata Glory loaded mainly gasoil from Abu Dhabi National Oil Co’s (ADNOC) Ruwais refinery and in a ship-to-ship transfer off Fujairah port this week, according to data estimates from Vortexa and two shipping sources.

It has the option to load more fuel before setting off for Africa, possibly Europe after, the sources added.

Trafigura and ADNOC declined to comment.

Traders have cleaned up Suezmaxes and VLCCs to load gasoil and jet fuel mainly from the Middle East and India’s west coast, Vortexa’s freight analyst Ioannis Papadimitrou said in a note.

It costs about $70 per ton to ship gasoil from the Middle East or India to Europe on a long-range 2 (LR2) vessel that carries 65,000 tons of oil versus $15 per ton on a VLCC that can load 270,000 tons, according to pricing data from SSY Tanker and two shipping sources.

The option for sellers to discharge some gasoil at some African destinations such as Togo and Tanzania on the way to Europe is an added benefit, a Singapore-based trade source said.

Trade sources say such a move could alleviate Asia’s supply glut and support refiners’ margins and prices.

However, it may also cap recent diesel price gains in northwest Europe, they added.

Some traders expect more crude tankers to be converted to carry clean products in the next two months as VLCC rates are expected to stay low amid lacklustre crude demand in Asia. At least two more VLCCs are in the process of cleaned up to load refined fuels the next few weeks, they added.

However, Vortexa’s Papadimitrou said the trend is likely to moderate in August if clean tanker rates show signs of cooling.

“The clean-up of these few VLCC and Suezmaxes are already adding quite a fair bit of clean tonnage supply to the market which could cap clean tanker rates,” he said.

Source: Reuters reported by Trixie Yap, additional reporting by Robert Harvey in London and edited by Florence Tan and Miral Fahmy