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The European and African oil market is showing more signs of tightness as peak summer demand nears and Asia seeks supplies to fill shortages caused by Iran’s blocking of the Strait of Hormuz. The disruption has added pressure to oil flows across Europe, Africa and Asia, with buyers competing harder for fewer available barrels.
The Iran war has forced the shutdown of at least 10 million barrels per day of oil from the Middle East, according to the report, including output affected by Iran’s effective closure of the strait and attacks on energy infrastructure in the region. That volume represents at least 10% of daily global oil consumption.
Asia has been the most affected because it is the world’s largest oil-importing continent and depends heavily on Middle East supplies. The Dubai benchmark hit an all-time high of $169.75 on March 23, while North Sea Forties crude climbed to a $7.20 per barrel premium to dated Brent, the highest on record, as physical markets tightened.
Market data also showed stress in Brent pricing. The first week of the short-term Brent swaps curve was trading $12.35 a barrel above the contract six weeks ahead on March 27, another record, while U.S. WTI Midland traded at a $9.50 per barrel premium to dated Brent for delivery to Europe on Monday.
Europe is losing barrels to Asia as traders chase higher prices, and West African crude is increasingly heading east instead of staying available for European refiners. Shipments to Asia from Europe and key West African producers Angola and Nigeria are set to rise by about 200,000 barrels per day in March from February to 3.72 million barrels per day, according to Kpler.
Some fuel cargoes have also been rerouted toward Africa, including four tankers carrying 168,000 tons of U.S. diesel and gasoil that diverted away from Europe and toward South Africa in recent weeks. Other cargoes carrying Middle Eastern and Indian diesel have also shifted course from Europe to Southeast Asia, highlighting how the supply squeeze is reshaping trade flows.
