The global oil trade landscape is undergoing a dramatic transformationUncertainty and volatility have become the new normal, marking a stark departure from what was once considered a stable market equilibriumSince 2019, the oil market has not reverted to its previous norms, and a significant decline in global crude oil exports looms on the horizon for 2024.

New transportation data reveals that worldwide crude oil exports could contract by 2% in 2024, a trend that hasn't been witnessed since the COVID-19 pandemic ignited widespread disruptionsThe decrease stems primarily from weak global demand and significant alterations in refinery production and pipeline alterations, which have collectively caused a reevaluation of trade routes.

Trade flows have been continuously disrupted by geopolitical tensionsShipping routes have been adjusted, with suppliers and buyers now segregated regionally

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For instance, the Middle East's oil exports to Europe have sharply diminished, while the United States and South America have stepped in to fulfill part of Europe’s growing demandFurthermore, oil that was once designated for European markets from Russia is now being rerouted to India and China.

The ongoing security threats in the Red Sea maritime corridors, coupled with the shuttering of refineries in Europe, have compounded these shifts in oil tradeAccording to vessel tracking data from Kpler, crude oil exports from the Middle East to Europe plummeted by 22% in 2024—a staggering decline reflecting these new realities.

Energy consultant and former oil trader Adi Imserovic commented on the opportunistic alliances emerging from these trade changesRelationships between Russia and countries like India, China, and Iran are tightening, thereby reshaping the global oil economy

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"Oil is no longer disbursed according to the lowest cost curve," he noted, indicating that modified shipping dynamics are driving freight costs upward, further eroding refinery profit margins.

The U.Shas emerged as a consequential player in this redefined global oil landscape, largely due to its skyrocketing shale oil productionAs of the latest assessments, the United States exports an impressive 4 million barrels of oil per day, which has led to a rise in its global oil market share to 9.5%, ranking just behind Saudi Arabia and Russia.

Additionally, the emergence of Nigeria’s Dangote refinery, expansions of the Trans Mountain Pipeline to the West Coast of Canada, declining oil production from Mexico, temporary interruptions in Libyan exports, and increased output from Guyana are factors redefining the established trade routes.

Forecasts suggest that by 2025, suppliers will likely grapple with reduced demand from major consumer centers like China

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Nations worldwide are also inclined to lessen their dependency on oil and pivot towards natural gas and renewable energy sources, which are expected to see substantial growth.

Eric Broukhuisen, a maritime research and consulting manager for Poten & Partners, remarked on the reshaping oil market dynamics"This uncertainty and volatility represent the new normal—2019 was the last year of predictability," he statedBroukhuisen's observations reflect the shifting assumptions that have long stood in the oil market regarding demand growth.

For instance, last year, China's crude imports fell by approximately 3%, attributed to the increasing popularity of electric vehicles and plug-in hybrid models, alongside a growing use of liquefied natural gas (LNG) in heavy truckingIn Europe as well, a combination of refining capacity reductions and government objectives aimed at carbon reduction led to a decrease in crude imports by around 1%.

As European refiners cut back on Russian imports, they concurrently ramped up purchases of oil from the U.S

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and the Middle EastWith heightened shipping costs due to attacks on vessels in the Red Sea, purchases from the U.Sand Guyana soared to unprecedented levels.

Oil exports from Iraq saw a reduction of 82,000 barrels per day, while exports from the United Arab Emirates dipped by 35,000 barrels per day in 2024. Conversely, Europe increased its imports from Guyana by 162,000 barrels daily and from the U.Sby 60,000 barrels.

Heightened tensions in the Middle East by the end of September, alongside concerns over the potential implementation of more sanctions by the U.Son Iran, have led to tighter oil supplies and increased pricesThis scenario has prompted refiners in China to explore oil purchases from West Africa and Brazil more seriously.

In Kpler's recent assessments, Nigeria's newly established Dangote refinery has dramatically increased domestic consumption of crudeIn 2024, approximately 13% of Nigeria’s crude exports were retained within the country, a considerable increase from merely 2% in 2023. As a result, Nigeria's exports to Europe have shrunk, and the country has even begun importing 47,000 barrels per day of U.S

WTI crude oil, a remarkable shift given its status as a primary net exporter.

New refinery capacities in Bahrain, Oman, and Iraq, alongside Mexico's Dos Bocas facility, are likely to absorb some of the oil production from neighboring regions in an attempt to adapt to changing supply and demand landscapes.

Additionally, in Canada, the expansion of the Trans Mountain Pipeline now enables the transportation of an additional 590,000 barrels per day to the Pacific CoastThis development could elevate the country’s offshore oil exports to a record 550,000 barrels per day in 2024.

The repercussions are cascading: As Canadian oil finds its way to the U.SWest Coast, local refineries are purchasing less crude from Saudi Arabia and Latin AmericaMoreover, Canadian oil being shipped to Asian nations has seen a reduction in re-exports from the U.SGulf Coast.

Analysts have identified China as a key buyer of Canadian crude oil, with these shipments also reaching India, Japan, South Korea, and Brunei