The global oil trade landscape is undergoing dramatic changes, reshaping itself amid growing uncertainty and volatilityThe year 2019 stands out as the last year of what many would consider "normal" conditions in the oil market, an era that many now reminisce about as the world grapples with the new realities of energy supply and demand.

Recent data highlights a notable development: in 2024, global crude oil exports have witnessed a decline of 2%, marking the first drop since the COVID-19 pandemic reshaped economies and behavioursThis downturn stems from a combination of sluggish demand growth worldwide and fluctuations in refining capacity and pipeline routes, which are forcing a reevaluation of traditional trade patterns.

Transport routes for oil tankers have been significantly altered, effectively redistributing suppliers and buyers across various regionsThe Middle East's exports to Europe have decreased, as more oil from the United States and South America finds its way to European shores

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At the same time, Russian oil that once flowed to Europe is now being redirected to markets in India and China, leading to a fundamental reconfiguration of energy supplies.

One of the factors intensifying this shift includes ongoing attacks along the Red Sea shipping routes, which have prompted closures of oil refineries in Europe, exacerbating these changesAccording to ship tracking data from Kpler, there has been an alarming 22% drop in Middle Eastern oil exports to Europe this year, underscoring the extent of the disruption.

Energy consultant and former oil trader Adi Imsirovic notes that "the shifting dynamics of oil flows are creating opportunistic alliances." This points to a tightening of relations between key players such as Russia, India, China, and Iran, which are collectively reshaping oil trading practices in today's world.

Crucially, we are witnessing a transformation where oil no longer flows along the lowest-cost trajectory

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This shift manifests in tighter shipping capacities, consequently driving freight prices upward and ultimately squeezing refining profit marginsThe overall environment has forced traders to adapt their strategies in response to newfound pressures.

Among the most significant shifts has been the ascent of the United States in the global oil tradeWith a surge in shale oil production, the U.Snow exports approximately four million barrels a day, elevating its share of global oil trade to 9.5%, trailing only Saudi Arabia and RussiaThis newfound dominance not only reflects increased production capabilities but also highlights a transformed competitive landscape where historical dynamics are increasingly questioned.

The reshuffling of trade routes has been influenced by several factors: the commissioning of Nigeria's Dangote refinery, an expansion of the Trans Mountain pipeline in Canada toward the western coast, a drop in oil production from Mexico, brief interruptions in Libya's oil exports, and an increase in output from Guyana

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These factors are reorienting traditional supply chains, emphasizing the interconnected nature of global energy markets.

Looking ahead, analysts project that by 2025, suppliers will continue facing decreased demand from major consumption centers like ChinaThe shift towards reduced oil usage in favor of natural gas, alongside the ongoing expansion of renewable energy sources, suggests a long-term trend away from traditional fossil fuels.

Poten & Partners' maritime research manager Erik Broekhuizen elaborates on this new environment, stating, “This uncertainty and volatility have become the new normal — 2019 was the last year of what we might call normality.” The implications of altered oil demand forecasts undermine the previously reliable assumptions of consistent growth in oil market consumption“In the past, one could always assert that there would be healthy long-term demand growth, and this would resolve many issues over time

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This assumption is no longer a given.”

For instance, last year saw China's imports dip by around 3%, something mostly attributable to the rise of electric and plug-in hybrid vehicles, along with increased usage of liquefied natural gas in heavy truckingIn Europe, a decline in refining capacity and the imposition of government targets for carbon reductions resulted in an approximate 1% decrease in crude oil imports.

This evolving scenario saw European refiners reducing imports from Russia while ramping up their purchases of oil from the U.Sand the Middle EastIn the wake of conflict in Gaza and subsequent attacks on shipping in the Red Sea, transportation costs for oil from the Middle East have surged, prompting refiners to source more crude from the U.Sand Guyana, creating record-high import levels.

In 2024, Iraq's exports dropped by 82,000 barrels per day, while the United Arab Emirates reduced its output by 35,000 barrels per day

In contrast, Europe has increased its imports from Guyana by 162,000 barrels per day, alongside a rise of 60,000 barrels per day from the U.S.

As tensions escalate in the Middle East amid concerns regarding further sanctions, Iranian oil supplies are tightening, contributing to increased prices, which influence Chinese refiners to consider sourcing crude from West Africa and BrazilThis shift in purchasing behaviours illustrates a ripple effect across global markets, highlighting how interconnected and responsive the oil industry has become.

Furthermore, Nigeria's new Dangote refinery has absorbed a substantial portion of the country's domestic oil supplies, resulting in an increase from about 2% to approximately 13% of Nigerian crude oil exports remaining in-country in 2024. Interestingly, Nigeria has even begun importing 47,000 barrels per day of WTI crude from the U.S., a remarkable development for a nation typically recognized as a net exporter.

Meanwhile, refinery capacities in Bahrain, Oman, and Iraq, along with the Dos Bocas refinery in Mexico, have the potential to absorb additional oil output from these regions, further stabilizing their markets despite external pressures.

In Canada, the upgraded Trans Mountain pipeline is set to facilitate an additional flow of 590,000 barrels per day to the Pacific coast, propelling the country's total waterborne exports to reach a historic high of 550,000 barrels per day in 2024. This adjustment in export channels produces a chain reaction in the market dynamics: as Canadian oil increasingly finds its way to U.S