According to the International Energy Agency’s Oil 2023: Analysis and Forecast to 2028 report, international sanctions against Russian energy exports have caused an unprecedented sea change in the global oil trade.
The report emphasizes how the G7 and European Union’s implementation of embargoes on Russian crude and oil products, along with the price cap that allowed EU maritime services to divert Russian oil to third countries, made it easier to reroute oil flows and reduced production losses on the global market.
Global Oil Trade
The US and the Middle East emerged as important sources for European refiners in their successful search for alternate crude oil suppliers. Greater North Sea amounts persisted in the area. Over the medium term, it is expected that trade flow expansion will increase, with the Atlantic Basin, excluding Russia, having a surplus of crude oil and condensate that will rise by 4.3 to 4.5 mb/d.
Asia’s demand for crude oil is anticipated to grow faster than Middle Eastern supply growth, and the Atlantic Basin surplus will be crucial in supplying this demand. By 2028, there should be a surplus of around 4.5 mb/d in the rest of the Atlantic Basin, up from a rough balance in 2022.
- International sanctions against Russian energy exports disrupt global oil trade.
- European refiners seek alternative crude oil suppliers, in the US, Middle East, and Atlantic Basin.
- Russian oil exports shift, Atlantic Basin crude surplus impacts shipping.
The study forecasts an increasing surplus in the Atlantic Basin and underlines important changes in global product trade flows. The dynamics of the oil market are changing as a result of these modifications, as well as diminishing regional demands and rising demand East of Suez.
The attraction of Atlantic Basin crude barrels and petrochemical feedstocks will be driven by the concentration of demand growth East of Suez, particularly in China.
According to the forecast, the Atlantic Basin, excluding Russia, is headed towards a net crude oil surplus, which is anticipated to increase between 2022 and 2028. The Asian crude deficit is being caused by steady demand growth and new refinery capacity, while Middle Eastern producing nations are not expected to considerably expand crude exports.
Similar to the shift in Russian oil exports from west to east, the surplus of crude export volumes from the Atlantic Basin to areas east of Suez will have significant effects on petroleum shipping.