Seaborne energy flows – is stagnation a good or a bad thing?
We look at seaborne energy arrivals on a product-by-product and wider shipping region basis. Observations for 2024 are overall negative, but there is a slightly positive note in the trend pattern.
Oil futures have been highly volatile over recent months due to geopolitical and macro jitters, but the general trend from the year-to-date peak in April is clear: downwards. If we had to nail this down to one factor, our answer would be clear – the lack of demand growth.
Evidently, the Vortexa perspective is primarily the seaborne one. Looking at all arrivals (including intra-country flows) and all tracked energy carriers (LNG, LPG, crude, motor fuels, other products), we note that since October 2023 – a full 12 months now – overall flows have been stagnant or declining on a year-on-year basis (see chart below). The average decline across all fuels is 600kbd.
From hereon, we will entirely focus on comparing the first nine months of 2024 with the same period in 2023. Overall, seaborne energy flows are down by 400kbd. The chart below shows that on a global basis (red diamonds), no product is really standing out in a positive way.
LPG with a y-t-d growth of 2.1% clearly leads the pack, but the involved quantities are comparatively small. LNG has seen a huge swing in deliveries away from Wider European markets, towards East of Suez destinations, but the net growth is marginal at 0.3%.
Motor fuels (gasoline, diesel, jet/kero) would also be down, were it not for strong growth in the Wider Mediterranean. However, this growth in flows is driven by changing trade patterns, rather than increasing consumption in the region. Russian diesel still largely hits the Mediterranean, and the countries that import it are at the same time exporting their own production to countries that are part of the sanctions regime against Russia (in what is a legal circumvention but not a violation of sanctions).
Change in seaborne energy arrivals in Jan-Sep 2024 vs Jan-Sep 2023, split by product (LNG, LPG, crude, motor fuels, other products) and destination wider shipping region (kt/d)
For the crucial crude oil market – overall down by 0.6% – only two regions show rising arrivals. New refinery start-ups in the Middle East and Nigeria keep more supplies within the respective regions. Traditional export markets in Europe, Asia and to a lesser extent America, are all shrinking – highlighting at the same time the competitive market environments in refining and shifting market shares.
Arrivals of all other products, including amid others naphtha, residual fuels, chemicals and biofuels, are down by about 2% globally, with most regions seeing negative trends.
On a regional basis, only three out of eight wider shipping regions are seeing growing inflows. The Wider Arabian Sea and South Atlantic see higher crude arrivals due to the start-up of new refineries. Wider Southeast Asia sees rising imports for some fuels. Wider NW Europe is overall the worst performer of all regions, seeing declines in all five product groups. Wider Northeast Asia must be a big concern for OPEC+, with liquid oil being down strongly while liquid gas imports are up. The Americas are also quite consistently down.
Change in seaborne energy arrivals in Jan-Sep 2024 vs Jan-Sep 2023 by destination wider shipping region and product (LNG, LPG, crude, motor fuels, other products) (kbd)
Overall, the seaborne flow picture does not look particularly healthy, and questions relatively higher 2024 global oil demand assessments made by some, to some extent.
On the other hand, it is always important to look at the trend in the data. That trend has been markedly negative from April 2023 to February 2024, but since then, it is at least a sideward trend if not rather an actual recovery. 2023 has clearly outperformed expectations and led to an overly optimistic view for 2024. It may well be that this year’s disappointments are clouding the outlook and sentiment for 2025 too much.
