Europe’s Oil Complex Copes With Supply Disruptions


Red Sea Tanker Delays

A reduction in Suez Canal tanker traffic due to heightened security risks has placed downward pressure on crude oil inventories in Europe, though overall, levels remain ample at key refining hubs as trade flows adjust to prevent a fuel crisis on the continent.  

Connecting the Red Sea and the Mediterranean, the Suez Canal is a critical passage for global trade, particularly oil, refined products and LNG, delivering supplies from Middle East producers to Europe.

The number of vessels passing through the Red Sea and Suez Canal is down 44% since November, with many ships now taking the longer voyage around the Cape of Good Hope, avoiding higher insurance premiums and threat of attack.

Major refineries in Europe have borne the brunt of supply disruptions, but so far, the fallout has been minor, according to Ursa Space data, which measures oil volumes inside floating top storage tanks based on satellite imagery.

European Site - Global Oil Inventories

Crude oil inventories at four refineries in Southern Europe located in France (Fos Sur Mer), Italy (Augusta, Milazzo) and Spain (Cartagena) averaged 84.8 million barrels in February 2024, down 6.7 million barrels from February 2023.

Southern European Crude Oil Inventories

Crude oil inventories at Northwest Europe’s refining hub – Amsterdam, Rotterdam, Antwerp (ARA) – averaged 72.5 million barrels in February 2024, down 5.3 million barrels from February 2023.


Apart from crude oil, shipments of refined products have also been impacted. Almost 50% of total diesel flows are bypassing the Red Sea, creating a ripple effect of its own. European refining margins have shot higher, an opportunity for product suppliers around the world to capitalize on.

The US Gulf Coast (USGC), in particular, has seized the moment. The region’s product exports surged in February, even though a number of refineries were offline for seasonal repairs.

Is there anything on the horizon that can upend profits for USGC refiners? 

One major issue is whether the additional capacity coming online from new refineries will overwhelm demand and squash margins.

That list includes Nigeria’s Dangote Refinery and Mexico’s Dos Bocas Refinery and Olmeca Refinery. 

Dangote is Africa’s largest refinery, with a colossal capacity of 650,000 barrels per day. 

The newly commissioned refinery is set to begin exports in late February.

Image: Dangote Refinery under construction (JAN092023; Planet)

Dangote’s crude oil inventories stood at 6.6 million barrels in late February, down from 8.2 million barrels, but up from 4.6 million barrels in early December just before the arrival of crude supplies, as seen in the large jump that month.

Dangote Refinery

So far, the Red Sea attacks have proven manageable for global trade, with flows rerouted to make up for any potential shortfall. The total closure of the Suez Canal would pose a harder test, recalling the costly incident in 2021 when a container ship ran aground.




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