The global crude oil trade landscape underwent a significant shift in 2024, marked by a reshuffling of trade routes, fluctuating demand, and the emergence of new refineries in the global south, particularly the Dangote Refinery in Nigeria. This massive refinery, with a capacity of 650,000 barrels per day (bpd), played a key role in altering Nigeria’s domestic oil consumption and its import patterns. The refinery retained 13% of Nigeria’s crude oil exports for domestic processing, a substantial increase from the previous year. This move simultaneously boosted Nigeria’s domestic share of oil consumption and marginally reduced its crude exports to Europe, indicating a shift towards self-sufficiency in refined petroleum products.
Despite being a major crude oil exporter, Nigeria recorded an unusual trend: importing 47,000 bpd of US oil. This surprising development can be attributed to the Dangote Refinery’s operational needs. The Nigerian National Petroleum Company Limited (NNPCL), grappling with pre-existing debt obligations from crude-for-loan agreements, struggled to meet the refinery’s demand. Consequently, the Dangote Refinery resorted to sourcing crude oil from the United States, significantly contributing to Nigeria’s overall crude imports. This situation highlights the complexities of managing domestic refining capacity alongside existing international commitments.
Globally, the volume of crude oil exports experienced its first decline since the COVID-19 pandemic, dropping by 2% in 2024. This downturn was driven by a combination of factors, including weaker global demand growth and the dynamic reshaping of trade routes influenced by geopolitical conflicts, sanctions, and the commissioning of new pipelines and refineries. The confluence of these elements created a complex web of shifting supply and demand dynamics, leading to a recalibration of the global oil trade network.
Geopolitical events, such as the ongoing wars in Ukraine and the Middle East, significantly impacted tanker shipment routes. Sanctions imposed on Russia and Iran compelled importers in Europe and South America to diversify their supply sources, leading them to explore alternative providers. The Israeli-Gaza conflict further complicated matters, as attacks on vessels in the Red Sea inflated shipping costs from the Middle East, prompting refiners to favor suppliers in the U.S. and Guyana. These geopolitical tensions introduced significant uncertainty and volatility into the global oil market.
The reshaping of oil trade routes was not solely driven by geopolitical factors. Infrastructural developments, such as the expansion of Canada’s Trans Mountain pipeline to its west coast, and production fluctuations, such as declining oil output in Mexico and the disruption of Libyan oil exports, also played a role. These factors, combined with the increased capacity provided by new refineries, particularly in the global south, further complicated the intricate web of oil trade relationships.
The emerging pattern of oil trade reveals a divergence in responses to geopolitical events. While European and South American refiners reduced their reliance on Russian oil, pivoting towards the U.S. and other sources, Asian giants like India and China readily absorbed the discounted Russian crude. This strategic divergence underscores the complex interplay of political and economic considerations in shaping international trade relations within the global oil market. The rise of new refining hubs, coupled with evolving geopolitical dynamics, signifies a period of transition and adaptation for the global oil industry. The long-term implications of these shifts remain to be seen, but they point towards a more fragmented and dynamic market landscape.
