Oil Buying Patterns Change Amid Red Sea Disruptions

Recent crude oil buying patterns have changed and looked increasingly more local as Houthi rebel attacks in the Red Sea and surging freight rates make more local supplies more attractive, sources told Bloomberg.

• The decline in tanker traffic through the Suez Cana has disconnected and split markets. One region is centered around the Atlantic Basin, including the North Sea and the Mediterranean, and another includes the Persian Gulf, the Indian Ocean and East Asia.
• Some European refiners skipped some purchases of Iraqi Basrah crude in January an instead bought more cargoes from the North Sea and Guyana, traders said.
• Rates for Suezmax crude tankers from the Middle East to Northwest Europe have jumped by around half since mid-December, Kpler data showed.
• Asian demand for Ab Dhabi’s Murban crude increased last month, which supported spot prices in mid-January, while flows from Kazakhstan to Asia are down sharply.
• January US crude loadings to Asia fell by more than one third month on month in January, Kpler data showed. The delivered cost of oil to Asia from the US rose by more than $2/bbl over a three-week period in January, traders said.
• “The pivot toward logistically easier cargoes makes commercial sense, and that will be the case for as long as Red Sea disruptions keep freight rates elevated”, Viktor Katona, analyst at Kpler said.