Oil exports from the Middle East to Europe dropped by nearly 25% in 2024, with supplies from the United States and South America stepping in to fill the gap. Geopolitical tensions in the Middle East, particularly attacks on vessels along the Red Sea following the war in Gaza, have disrupted transport routes and increased shipping costs, prompting European refineries to seek alternative suppliers.

Shift in Supply Sources

Iraq’s exports to Europe declined by 82,000 barrels per day (bpd), while the UAE saw a drop of 35,000 bpd. In contrast, Europe ramped up imports from Guyana by 162,000 bpd and from the US by 60,000 bpd—both reaching record highs.

According to Francesco Sassi, a researcher at Rie-Ricerche Industriali ed Energetiche in Bologna, Middle Eastern oil has become less competitive due to increasing costs and expanding sanctions on Russian and Iranian crude. By December 2024, oil from the UAE and Oman had reached its highest price spread against Brent crude in the past year.

US Oil Production on the Rise

The United States has emerged as a major supplier, with oil production rising by over 4% per year on average in 2024. This increase is driven by improved efficiency, allowing companies to extract more oil from fewer rigs.

John Kemp, an energy analyst based in London, noted that the US now exports 4 million bpd, raising its share of the global oil market to 9.5%, behind only Saudi Arabia and Russia. Despite efforts by Saudi Arabia and its OPEC+ allies to regulate supply and support prices, rising output from non-OPEC countries has made it harder to maintain high price levels.

Europe’s Sluggish Demand and China’s Decline

Oil demand in Europe remained weak in 2024 due to the ongoing transition toward cleaner energy sources and a slowdown in industrial activity, particularly in Germany. While European oil demand peaked at 15.2 million bpd in 2019, it still accounts for nearly 14% of global consumption, ranking behind only China and the US.

Meanwhile, China’s oil imports fell by approximately 3% last year, influenced by the rapid expansion of electric vehicles and increased use of liquefied natural gas (LNG) in heavy trucking. Analysts predict this subdued demand will persist in 2025.

Energy expert Matt Stanley from Kpler remarked that expectations of strong Chinese demand have once again fallen short. However, he anticipates a rebound in Asian demand in the latter half of 2025, coinciding with increased oil output from Guyana, Brazil, and Canada.

While the International Energy Agency (IEA) has repeatedly warned that peak global oil demand is imminent, Stanley believes it will likely occur next year.