By Arathy Somasekhar
HOUSTON (Reuters) – The volume of global crude exports in 2024 declined 2%, the first fall since the COVID-19 pandemic, shipping data showed, due to weak demand growth and as refinery and pipeline changes reshuffled trade routes.
Global crude flows have been roiled for a second year by war in Ukraine and the Middle East, with tanker shipments rerouted and suppliers and buyers split into regions. Middle East oil exports to Europe declined and more U.S. oil and South American oil went to Europe. Russian oil that formerly went to Europe has been redirected to India and China.
These shifts have become more pronounced as oil refineries have shut in Europe amid continued attacks on Red Sea shipping. Middle Eastern crude exports to Europe tumbled 22% in 2024, ship tracking data from researcher Kpler showed.
The shift in oil flows “is creating opportunistic alliances,” said Adi Imsirovic, an energy consultant and former oil trader, citing closer relationships between Russia and India, China and Iran that are reshaping oil trade.
“Oil is no longer flowing along the least cost curve, and the first consequence is tight shipping, which raises freight prices and eventually cuts into refining margins,” said Imsirovic.
The U.S. with its surging shale production has been a winner in the global oil trade. The country exports 4 million barrels per day, boosting its share of global oil trade to 9.5%, behind Saudi Arabia and Russia.
Trade routes have also been reshuffled by startup of the massive Dangote oil refinery in Nigeria, expansion of Canada’s Trans Mountain pipeline to the country’s west coast, falling oil output in Mexico, a brief halt in Libyan oil exports, and rising Guyana volumes.
In 2025, suppliers will keep grappling with falling fuel demand in major consuming centers such as China. Also, more countries will use less oil and more gas, while renewable energy will keep growing.
“This kind of uncertainty and volatility is the new normal – 2019 was the last ‘normal’ year,” said Erik Broekhuizen, a marine research and consulting manager at ship brokering firm Poten & Partners.
FURTHER ROOM TO FALL
Changes in oil demand forecasts have pulled the rug out from historical long-term oil market growth assumptions, Broekhuizen said.
“In the past, you could always say that there will be healthy long-term demand growth, and that solves a lot of problems over time. That can’t really be taken for granted anymore,” he said, citing weaker demand in China and Europe.
