Oil Flows Down 15% on Red Sea Concerns: Morgan Stanley

Oil flows are down about 15% with Red Sea safety concerns impacting the shipping route according to Morgan Stanley on Jan 31.

Flows are “rolling over, with further declines likely to come,” although the fall out is complex.

• The impact on flat price crude is expected to be limited, although the disruption is supportive of the Brent-Dubai spread and European middle-distillate cracks.
• Oil product shipping is seeing more disruption that crude with redirected flows increasing ton-miles by 5%-6%.
• Suez Canal shipments via the route totalled 7.2mb/d in 2023 almost precisely split between crude and refined products with Russia accounting for 35%-40% of the flows.
• The route accounts for about 9% of total seaborne trade in crude oil, about 15% for gasoil, 21% for fuel oil, and 30% for jet fuel.