KEY POINTS
- Asian demand is diverting crude from Europe and West Africa after disruptions in the Strait of Hormuz removed about 10 million barrels per day from global supply.
- Key benchmarks including North Sea Forties and Brent-linked contracts have hit record premiums, signaling severe market tightness.
- Tankers carrying crude and refined fuels are being rerouted from Europe to Asia and Africa, intensifying global competition for limited oil supplies.
The European and African oil markets are tightening sharply as Asian buyers increasingly compete for limited crude supplies, pushing key benchmarks and differentials to record highs ahead of peak summer demand.
The shift follows a prolonged disruption linked to Iran’s effective closure of the Strait of Hormuz, now in its fifth week. The conflict has shut in at least 10 million barrels per day of Middle East supply due to blocked shipping lanes and attacks on energy infrastructure across the Gulf.
That volume represents roughly 10 percent of global daily oil consumption, significantly tightening available barrels worldwide.
Asia has been hit hardest because it depends heavily on Middle Eastern crude. With supply constrained, Asian buyers have turned to alternative sources in Europe and West Africa, pulling barrels away from traditional European buyers and intensifying competition.
The tightening is visible in price differentials. North Sea Forties crude surged to a record premium of $7.20 per barrel above dated Brent, according to market data.
Meanwhile, the Brent swaps curve also reflected strong near-term demand, with prompt contracts trading $12.35 per barrel above those six weeks ahead, another record.
The scramble for available cargoes is pushing prices higher
Analysts say the scramble for available cargoes is pushing prices higher across the board. With fewer barrels available globally, buyers are bidding aggressively to secure supply, particularly for immediate delivery.
Investment bank analysts note that West African crude, which typically swings between Europe and Asia, is increasingly flowing east. That diversion reduces the pool of oil available to balance European demand, tightening regional markets further.
U.S. WTI Midland crude, which helps set the dated Brent benchmark, also surged, trading at a record $9.50 per barrel premium for delivery into Europe, nearly $8 higher than levels before the conflict began.
Shipping data indicates crude and refined product flows to Asia from Europe, Angola and Nigeria are expected to rise by about 200,000 barrels per day in March compared with February, reaching 3.72 million barrels per day.
Tanker movements also highlight the shift. Several vessels carrying U.S. diesel and gasoil have diverted from Europe to South Africa, while others initially bound for Europe turned toward Southeast Asia.
