High Freight Costs Push Europe to Atlantic Crude Producers

European has looked to US, Middle East, and Africa to replace Russian barrel although increased freight costs have favoured short-haul supplies. Demand for tanker services has surged as sanctions have redirected trade flows forcing Russian supplies on longer-haul routes to locations such as India or to China.

• The biggest increases in crude imports to Europe have come from the US, Norway and Angola, comparing flows in 1Q23 against 2021 according to IEA using Kpler data. There has been almost no increase in the volume of crude from the Middle East into Europe.
• The tanker fleet is more inefficient with vessels tied up longer and affecting the entire global freight market. Over the last two months, the average cost that producers pay to ship fuel and petroleum has more than doubled.
• New tankers are not expected to be available to ease the crunch with a decreasing growth in the global fleet size until about 2025 according to Vortexa.