Rhine water levels approach zero, threaten barge transport

Water levels on the Rhine fell to 20 centimeters on Sept. 18, with forecasts now predicting the water levels to reach zero by the end of the month, a development that threatens to shut down barge transport across the entirety of one of Europe's most important fuel supply arteries, with only partial services on some stretches expected to continue.

Water levels at Kaub, the shallowest part of the Middle Rhine, stood at 20 cm as of the evening of Sept. 18, after mostly hovering around 30 cm between Sept. 14 and Sept. 17.

The levels are now forecast to approach zero by Sept. 28 and then remain at that level for at least three days, according to data from the German water authority WSV.

The Rhine's low-water crisis continued to constrain product logistics across the region, market participants told Platts, part of S&P Global Energy. The Upper Rhine destinations are nearing a de facto shutdown as water levels remain critically low.

A European trader warned that with no meaningful rainfall in sight, severe navigational restrictions may persist for an extended period without a significant change in weather patterns.

German weather service DWD forecasts some rain across Rhineland-Palatinate, where Kaub is located, on Sept. 20, but expects mostly dry conditions on Sept. 19 and Sept. 21.

Freight rates and logistical disruptions were contributing to exceptionally strong refining economics, according to the European trader who described current market conditions as unprecedented.

Platts assessed the ULSD 10ppm Northwest European Cargo flat price at $1,558.75/mt Sept.18, while the ULSD 10ppm Mediterranean Cargo flat price was assessed at $1,594.75/mt. For context, ULSD 10ppm NWE Cargo averaged $1,290.63/mt in August and $1,169.89/mt in July, while the Mediterranean average price was $1,322.56/mt in August and $1,194.79/mt in July.

A second market participant said the disruption increased reliance on alternative transport routes, with rail and pipeline infrastructure operating at high utilization rates as barge loadings remain constrained by low water levels.

Freight costs from Amsterdam-Rotterdam-Antwerp hub to Basel, Switzerland, were at €215/mt ($287.92/mt), up from €165/mt on Sept. 11, Spotbarge data showed.

"The situation for refineries along the Rhine remains largely unchanged as water levels return to critical lows. Wesseling and Karlsruhe have alternative crude supply via the Rotterdam–Rhine Pipeline and Trans-Alpine Pipeline, respectively, while Gelsenkirchen can access crude through the nearby, pipeline-connected Scholven tank facility," said Sammir Lesage, analyst at S&P Global Energy CERA.

Refineries should still be able to clear product even with severely limited barge access, using product pipelines, rail and road for more critical products if needed, according to Lesage. "However, these alternatives cannot fully replace barges at normal volumes, resulting in a slower and more expensive clearance," he clarified.

In addition, rail options in Germany remain limited because of the closure of the right-bank Middle Rhine Line, a key German freight route, between July 10 and Dec. 12 for major refurbishment.

The situation in Switzerland, where the Rhine begins, was aggravated by an interruption of operations at the oil refinery in Cressier because of an unspecified technical defect. The only Swiss refinery, which normally covers around 30% of the country's demand, halted operations at the beginning of September and resumed operations on Sept. 16.

"Additional deliveries via rail transport and the pipeline for petroleum products from France to Geneva, which are already heavily utilized, will not be able to compensate for the loss of production in time and in full," the Swiss government said Sept.8.

To support the market, the government has authorized purchases from the compulsory oil stocks, with 30,000 cubic meters of gasoline and diesel each available for withdrawal between Sept. 8 and Sept. 20.