- The latest International Energy Agency (IEA) Oil Market Report (OMR) reveals that shipping disruptions in the Red Sea have led to a surge in oil in transit to record levels.
- Tanker attacks in the Red Sea have diverted more oil tankers around Africa, causing a significant increase in oil kept on water.
- These disruptions, coupled with global trade shifts following geopolitical events, have resulted in the highest levels of oil in transit on record.
Shipping disruptions in the Red Sea have caused a substantial increase in oil in transit, with oil tankers opting for longer routes around Africa due to repeated tanker attacks. In February alone, oil on water surged by 85 million barrels, reaching nearly 1.9 billion barrels by the end of February, the second-highest level since the Covid-19 pandemic.
Global Trade Shifts
The report attributes the rise in oil in transit to record global oil exports and shifting trade patterns, particularly following Russia’s invasion of Ukraine and unrest in the Middle East. The rerouting of Russia’s oil exports and the avoidance of the Red Sea due to tanker attacks have led to a decline in oil transportation via the Suez Canal by 50% in February compared to the previous year.
Impact on Oil Demand and Supply Balance
These trade shifts have resulted in higher demand for bunker fuel for ships, particularly in major maritime refueling centers like Singapore. Consequently, the IEA has slightly revised its forecast for global oil demand growth in 2024 from 1.2 to 1.3 million barrels per day. However, despite the increase in demand, the global supply balance for the year is expected to shift from a surplus to a slight deficit, especially as massive volumes of oil in transit reach their final destinations.
OPEC’s Forecast and Outlook
The Organization of the Petroleum Exporting Countries (OPEC) has maintained its global oil demand growth forecast for 2024 at 2.2 million barrels per day. Additionally, robust growth in global oil demand of 1.8 million barrels per day year-on-year is anticipated for 2025. These forecasts indicate the ongoing impact of geopolitical events and shipping disruptions on the global oil market.
Did you subscribe to our daily Newsletter?
It’s Free! Click here to Subscribe
Source: Offshore-Energy
