The photo is sourced from ics-shipping.org
The increase in the transit of raw materials through the Strait of Malacca is largely linked to the recovery in oil demand in the Asia-Pacific region after the COVID-19 pandemic: oil transportation increased by 1.5 million bpd between 2021 and 2023, with petroleum products adding 0.3 million bpd. About 60% of these raw materials is represented by oil and petroleum products from the Middle East, including the four largest exporters among the OPEC countries: Saudi Arabia, Iraq, Kuwait and the United Arab Emirates (UAE).
The other 40% comes from four groups of suppliers: Russian producers who transport oil and petroleum products to the east (exports from ports in the European part of the Russian Federation) and to the west (supplies from Sakhalin); the United States, which increased its total exports of oil and petroleum products by almost 20% (from 8.6 million bpd to 10.2 million bpd) in 2021–2023; African countries, which have been reducing their transit volumes through the Strait of Malacca in recent years due to lower production in Angola and Nigeria; and Malaysia and Indonesia, regional oil producers (with a total output of 1.2 million bpd in 2023), which use the Strait of Malacca not only for exports, but also for domestic shipping.
The transit of oil and petroleum products through the Strait of Hormuz dropped by 200,000 bpd (to 20.9 million bpd) in 2023. In addition to the OPEC+ deal, under which Saudi Arabia reduced its oil and gas condensate production by 800,000 bpd (to 11.4 million bpd) in 2023, this was caused by the use of transportation infrastructure bypassing the Strait of Hormuz. For instance, the UAE has an oil pipeline with a capacity of 1.5 million bpd, through which oil is transported to the port of Fujairah, a major regional hub for oil and petroleum products located on the coast of the Gulf of Oman. Meanwhile, Saudi Arabia uses the East-West oil pipeline designed to transport oil to the coast of the Red Sea.
There wasn’t enough time for the Red Sea conflict to seriously affect transit volumes last year: the volume of oil and petroleum transportation through the Bab el-Mandeb Strait adjacent to the Red Sea has gone from 5.4 million bpd in 2021 to 7.5 million bpd in 2022 to 8.6 million bpd in 2023. As a result, the year 2023 saw the Red Sea become the third-largest transport artery in the oil market, ahead of the Cape of Good Hope (6.0 million bpd), the Danish Straits (4.9 million bpd), the Panama Canal (2.1 million bpd) and Turkey’s Dardanelles (3.4 million bpd).
However, this list is going to change in 2024 due to the aforementioned conflict in the Red Sea. For instance, according to the IMF and Oxford University, the number of tankers with oil, petroleum products and liquefied natural gas (LNG) using the transit route across the Red Sea has fallen by nearly 60%, from 835 in April 2023 to a mere 342 in April 2024.
