Crude Trade: Looking Beyond The Barrels

Seaborne crude oil trade volumes have come under some pressure in recent years, with total crude trade in 2014 estimated at 3% below 2005 levels. However, over the same period, seaborne crude oil trade in terms of tonne-miles increased. While the estimated pace of growth in tonne-mile trade has still been relatively limited, trade in 2014 was up by around 6% compared to 2005.

The Big Three

Three crude importers have helped shape these trends since 2005; China, India and the US. In 2014, these three nations accounted for 40% of total seabornecrude imports. Both China and India have significantly increased crude imports, with imports to these two countries rising by a CAGR of 9.0% in the years 2005-14, adding 5.2m bpd of crude imports, and more than cancelling out the drop of 3.9m bpd in US crude imports. Meanwhile, volumes to other OECD nations have also fallen, dampening global crude trade. However, since 2009, growth in tonne-mile trade has consistently outpaced growth in terms of barrels.

Long Tonnes To Asia

The accelerated rate of tonne-mile trade growth is reflected in the increase in the average haul of crude oil trade to more than 5,000 miles in 2014, 9% greater than 2005 levels. Whilst China has been key to supporting this trend, the average haul of Chinese crude imports was just 3% higher in 2014 than in 2009. This is largely due to China increasing imports from a wide variety of sources, on both long-haul and shorter-haul routes (including the Caribbean, West Africa, Middle East and Russia). However, since Chinese crude imports are longer-haul than the global average (by around 50% in 2014), the rapid growth of Chinese crude import volumes has boosted the pace of global tonne-mile trade growth.

Meanwhile, India has increasingly sourced its oil from farther afield, with the average haul of Indian crude imports breaking the 4,000 mile mark in 2014, compared to 1,900 miles in 2005, whilst crude import volumes were almost twice as great as 2005 levels. Indian tonne-mile imports more than tripled during the same period, contributing to the accelerated pace of global tonne-mile trade growth. This growth has been largely driven by an increase of Indian imports of West African and Caribbean crude.

Cutting It Short

Interestingly, although US crude imports dropped 46% between 2005 and 2014, the country has also contributed to tonne-mile trade trends. Most of the fall in US imports has been on short-haul trades. For example, in the first three quarters of 2014, US imports of West African crude dropped 60% y-o-y, whilst imports from the Middle East rose 2%. As a result, US tonne-mile imports have declined less rapidly than trade volumes, while the average haul of US imports rose to 7,000 miles in 2014, 18% higher than in 2005.

So, clearly the global picture for crude oil trade is more complicated that just totting up the barrels. Long-haul trades seem to be driving the majority of volume growth, and with Chinese crude oil imports recently hitting record highs, it seems likely that in the short-term, tonne-mile trade will continue to outpace volume growth.
Source: Clarksons