Global crude exports fall amid trade route shifts

• Published On: 07 January 2025 at 18:21

Global crude exports fell by 2% in 2024, the first decline since the COVID-19 pandemic, owing to slow demand growth and changes in refinery and pipeline routes.

The ongoing wars in Ukraine and the Middle East have continued to disrupt global crude flows, forcing tanker shipments to be rerouted and causing regional divisions among suppliers and buyers.

According to Reuters, Middle Eastern oil exports to Europe fell, while shipments from the United States and South America increased.

Russian oil that was originally destined for Europe has been redirected to India and China.

The shifts in global crude exports have accelerated as European oil refineries closed, compounded by ongoing attacks on Red Sea shipping. Middle Eastern crude exports to Europe fell 22% in 2024, according to ship tracking data from researcher Kpler.

The shift in oil flows "is creating opportunistic alliances," according to Adi Imsirovic, an energy consultant and former oil trader. He cites stronger ties between Russia and India, as well as China and Iran, as 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," says Imsirovic.

The United States, fuelled by rising shale production, has emerged as a major player in global oil trade, exporting 4 million barrels per day and capturing 9.5% of the market, trailing only Saudi Arabia and Russia.

The start-up of Nigeria's massive Dangote refinery, the expansion of Canada's Trans Mountain pipeline to the west coast, declining Mexican oil output, a temporary halt in Libyan exports, and increased volumes from Guyana have all reshaped trade routes.

In 2025, suppliers will face declining fuel demand in major consumer markets such as China.

Furthermore, many countries are expected to use more natural gas and renewable energy, reducing their reliance on oil.

"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 Poten & Partners, a ship broking firm.

China's oil imports fell by about 3% in 2024, owing to the growing adoption of electric and plug-in hybrid vehicles, as well as the increased use of liquefied natural gas in heavy trucking.