Global seaborne crude trade volumes have increased by only 1% per annum on average between 2001 and 2011, despite the headline grabbing rise of Chinese crude imports. Yet, the global trend has been one of crude source diversification. New areas of production have helped countries and regions broaden their crude supplies.Black Dragon
Chinese seaborne crude imports increased by 392% between 2001 and 2011 to 4.6m bpd.
Yet, as shown in the Graph of the Month, the share sourced from major exporters has changed over the same period. The increase in Chinese demand was coupled with a desire by the government to ensure resilience against oil shocks through supply diversity. As a result, the share of Chinese tonne-mile trade from the Arabian Gulf (AG) declined from 64% of total Chinese crude tonne-miles in 2001 to 52% in 2011, while the tonne-mile share from the Caribbean region (Caribs) increased from 1% to 18%. This added an extra boost to the tanker market, as the longer distances involved have helped to absorb available tanker tonnage.
Decline and Spread
By contrast, North America has seen its seaborne crude imports decline by 17% between 2001 and 2011 to 7.4m bpd, the lowest level since 1996. While increases in domestic supply and declining demand have impacted on seaborne crude imports, high freight rate long-haul trades have been worst hit by this. Lower imports from the AG led the regions share of crude tonne-miles to North America to decline from 62% in 2001 to 53% in 2011. This has been partly offset by an increased share of trade from the Caribs and West Africa, while imports from the Baltic and Black Sea have become part of US supplies, due to Russian oil infrastructure developments.
Opening New Doors
The completion of the Russian oil terminal at Primorsk on the Baltic coast in 2001 also had a profound impact on European seaborne crude imports. The share of Baltic/Black Sea tonne-mile exports into the UK/Continent (UKC) increased from 14% in 2001 to 29% in 2011. This was down to a sharp rise in crude exports from the Baltic, which increased by 151% between 2001 and 2011, producing a discernable effect in tonne-mile terms despite the short distances. North European refiners were also driven to source more crude from Russia in 2011, when the Libyan conflict removed a supplier.
For Mediterranean importers, including France, Spain and Italy, the mix of crude supply sources has remained comparatively similar. However, the Libyan crisis impacted on Mediterranean demand in 2011 to an even greater extent than for the UKC, explaining the decline in tonne-mile share as compared to 2001.
That crude source diversification has occurred in all the regions of intensive crude demand is a result of both the tightening in global supply, linked to the surge in Chinese imports, and the conscious decision by refiners and governments to protect themselves against unforeseen shut ins and shocks to production. Ultimately, though global oil demand has grown comparatively slowly since 2001, diversification has driven significant changes to global oil trade patterns and routes.