Data from the shipping sector showed that the volume of global crude exports in 2024 fell by 2% in the first decline since the Corona pandemic, affected by several reasons, most notably the Israeli aggression on Gaza and the war in Ukraine, amid the restructuring of trade routes due to a change in refineries and pipelines.
The flow of global crude supplies has been disrupted for the second year due to the war in Ukraine and the Middle East, with tankers redirected and suppliers and buyers divided into regions.
Oil exports from the Middle East to Europe declined, while more US and South American oil went there, and Russian oil that had previously gone to Europe was redirected towards India and China.
These transformations became more evident with the closure of oil refineries in Europe amid continuing attacks on shipping in the Red Sea, and data tracking ship movement from Kpler Research showed that crude oil exports from the Middle East to Europe decreased by 22% in 2024.
Energy consultant and former oil trader Adi Imsirovic said that the shift in crude flows “creates opportunistic alliances,” pointing to a rapprochement between Russia, India, China and Iran that is reshaping oil trade.
The United States, with its increasing production of shale oil, is among the winners in global oil trade, as it exports 4 million barrels per day, which increases its share in global crude trade to 9.5%, after Saudi Arabia and Russia.
Trade routes have also been reshaped by the launch of operations at the massive Dangote oil refinery in Nigeria, the expansion of the Canadian Trans Mountain Pipeline to the country’s west coast, a decline in oil production in Mexico and a rise in Guyana, and a brief pause in Libyan crude exports.
Regarding expectations about oil consumption during 2025:
- Fuel demand in major consumption centers such as China is expected to continue to decline during this year. China’s imports fell by about 3% last year with the rise of electric and plug-in hybrid cars and the increasing use of liquefied natural gas in heavy trucks. In Europe, the decline in refining capacity and government decisions to reduce carbon emissions led to a reduction in crude imports by about 1%.
- More countries will also use less oil and more gas.
- Renewable energy will continue to grow.
“This kind of uncertainty and volatility is the new normal,” said Erik Broekwegen, director of marine research and consulting at Boutin & Partners. “2019 was the last normal year.”
New suppliers and routes
European refineries reduced Russian imports and increased oil purchases from the United States and the Middle East after Russia’s invasion of Ukraine, and attacks on ships in the Red Sea following the Israeli war in the Gaza Strip led to a rise in the cost of shipping from the Middle East. Refineries increased their imports from the United States and Guyana to unprecedented levels.
During the past year, Iraq’s exports declined by 82,000 barrels per day, UAE exports by 35,000 barrels per day, and European imports increased by 162,000 barrels per day from Guyana and 60,000 barrels per day from the United States.
The escalation of the conflict in the Middle East in late September and fears of imposing more US sanctions on Tehran led to a reduction in the supply of Iranian oil and a rise in its prices, and this prompted Chinese refineries to search for new sources in West Africa and Brazil.
New refineries and pipelines
Dangote’s new refinery in Nigeria consumed a large amount of domestic supplies and reduced the country’s exports by about 13% in 2024, up from 2% in 2023, according to Kpler.
This led to a reduction in Nigeria’s exports to Europe, and Nigeria also imported 47,000 barrels per day of US West Texas Intermediate crude, which is unusual for a major exporter.
Increased refining capacity in Bahrain, Oman, Iraq and Mexico is also likely to consume some of the oil production in those countries.
As Canadian crude supplies to the West Coast of the United States increased, refineries in the region bought less Saudi and Latin American oil, while direct shipments from Canada to Asian countries reduced re-exports from the US Gulf Coast.
Although China was the main buyer of Canadian oil, the crude also found importers in India, Japan, South Korea and Brunei, and analysts believe that other Asian refineries will buy Canadian oil.
Analysts say that the 25% tariffs proposed by US President-elect Donald Trump on oil from Canada and Mexico, the largest oil exporters to the United States, may change crude flows during 2025.
