Crude shipments to Asia from Europe, plus key West African producers Nigeria and Angola, are set to rise by about 200,000 bpd in March from February to 3.72 million bpd, according to data from Kpler.
The Iran war has forced the shutdown of at least 10 million barrels per day of oil from the Middle East due to Iran’s effective closure of the Strait, and attacks on Iranian and other Middle East Gulf nations’ energy infrastructure. That production volume represents at least 10% of daily global oil consumption.
Asia has been most affected by oil and gas disruptions, as it is the world’s largest oil-importing continent and relies on supplies from the Middle East.
The Middle East Dubai oil benchmark hit an all-time high of $169.75 on March 23, breaking Brent futures’ previous record of $147.50 set in 2008 to become the most expensive oil benchmark ever.
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Shortages and stiff competition from Asian buyers looking to secure valuable barrels elsewhere have pushed up prices for European buyers, Morgan Stanley analysts said on Monday.
“The supply being diverted east is coming out of the pool that Europe would otherwise use to balance itself,” the Morgan Stanley analysts said, adding that more oil from West Africa, which can swing between European and Asian buyers, is heading to Asia.
On Monday, U.S. WTI Midland crude, which helps set the dated Brent benchmark, traded at a record $9.50 per barrel premium to dated Brent for delivery to Europe, almost $8 higher than before the war started.
Some fuel shipments have even been rerouted away from Europe towards Asia and Africa, a further sign of tough global competition for short supplies.
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Four tankers carrying 168,000 tons of U.S. diesel and gasoil have diverted away from Europe and towards South Africa in recent weeks, according to consultancy Energy Aspects.
That follows at least four other tankers carrying a combined 430,000 tons of Middle Eastern and Indian diesel in late February to early-March, which began sailing towards Europe and then U-turned towards Southeast Asia, the data showed.
European gasoline cargoes are also heading to Asia after Asian prices surged on tightening supply, and Asia is also taking more crude cargoes from Europe and West Africa, according to trade sources quoted by Reuters and shipping data.
The European and African oil markets are showing more signs of tightness, with some crude differentials hitting record highs as peak summer demand nears and Asia seeks supplies to fill shortages caused by Iran’s blocking of the Strait of Hormuz, now in its fifth week.
READ ALSO: More Revenue For Nigeria As NNPC Exports 950,000 Barrels Cawthorne Blend Crude
In an example of tightening markets, North Sea Forties crude surged to a $ 7.20-per-barrel premium to dated Brent on Friday, the highest on record, according to LSEG data.
The paper markets surrounding North Sea physical prices also show tightness. The first week of the short-term Brent swaps curve, known as contracts for differences, which indicates the dated Brent value, was trading $12.35 a barrel higher than the contract six weeks ahead on March 27, also a record.
“Globally, there are fewer barrels available, so the people who need them are bidding prices up,” Neil Atkinson, former head of the oil markets division at the International Energy Agency and a veteran oil analyst, told Reuters.
The development followed the Nigerian National Petroleum Company (NNPC) Limited introduction and lifting of 950,000 barrels of Cawthorne Blend crude into the global market.
The feat was achieved through the FSO Cawthorne vessel, Nigeria’s first new crude oil terminal in 50 years.
Over the weekend, the first shipment of 950,000 barrels from FSO Cawthorne, was initiated following its licensing and gazetting by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), according to a statement from Sahara Group.
