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Deciphering the oil market by tracking tankers

IEA analysis confirms a traffic shift favouring the East.

With official data often tardy, the IEA counts oil tankers for an up-to-date assessment of trade flows: right now, the focus is on Iranian shipments

3 December 2012

This article appears in the latest issue of IEA Energy: The Journal of the International Energy Agency.

By Andrew Wilson

Longer than three football pitches, weighing more than 200 000 tonnes when fully laden and travelling at speeds of up to 15 knots, oil tankers inspire awe. Besides being important cogs in the global oil supply system, transporting as much as 500 million barrels of crude oil by sea at any time, these modern-day leviathans and their movements provide insights into the workings of the global oil market.

In contrast to the difficulty of tracking pipeline shipments, especially when official data are unavailable or delayed, monitoring tanker voyages gives an up-to-date view of developments in oil trade flows. The IEA benchmark monthly Oil Market Report employs tanker data on an ongoing basis not only for trade analysis but also to build fundamental supply and demand estimates.
Vessel movements routinely feed into the report’s monthly estimations of OPEC crude supply. Current official data are often unavailable at the time of publication, but tanker information is up-to-date and includes cargoes still en route, permitting as close to a real-time determination of a country’s exports as possible. Tanker data are especially useful for monitoring countries that deliver most of their oil by sea, such as Saudi Arabia, but must be combined with pipeline and rail shipment volumes for countries such as Russia that also dispatch a significant portion of their oil overland.

Cat-and-mouse tracking of Iran’s cargoes

Tanker data also aid in monitoring specific events such as the threat that political upheaval in Egypt posed to the Suez Canal, supply outages in the North Sea and the civil war in Libya. Presently, the IEA Oil Industry and Markets Division is closely monitoring how much oil Iran is exporting and who is buying that oil. Official customs data from many OECD and non-OECD customers of Iranian oil are available only after a lag of a couple of months, so tanker shipments are invaluable for a timely determination of which countries are buying how much Iranian oil.

Vessel monitoring, when combined with information supplied by shipbrokers, also provides insight into floating storage: oil that is stored at sea and does not yet have a buyer. Iran has limited land-based storage and is storing crude oil on vessels owned by the national carrier, National Iranian Tanker Corporation (NITC). Monitoring exports and floating storage permits an estimate of Iranian crude production that can establish the effect of sanctions on the Iranian oil industry.

Iran has ordered NITC tankers to deactivate their automatic identification system beacons routinely and to re-flag and rename many vessels. Because ships are required to activate their beacons when in port and when transiting certain maritime regions such as the Middle East Gulf, these attempts to hinder the monitoring of carriers have succeeded only in adding an extra layer of complexity to the data. But the actions have raised the prospect of covert ship-to-ship transfers at sea to disguise cargoes’ origins, though without firm evidence it is impossible to establish whether such manoeuvres have taken place.

Data detail a shift towards the East

Oil Industry and Markets Division analysis sees increasing seaborne-transported oil volumes over the coming years and a rebalancing of the trade in crude oil towards the East. The rapid development of non-OECD Asian economies, notably China and India, with their seemingly unquenchable thirst for oil, is taking more and more Middle Eastern and African grades Eastwards, while the mature regions of Europe and North America slowly reduce their seaborne imports. 

As customs data from non-OECD countries are generally not as precise or timely as those from OECD members, tanker tracking will become ever more valuable to oil market analysts.  

Andrew Wilson joined the IEA in 2006 to work on monthly oil data in the Energy Statistics Division. He became the freight and trade analyst in the Oil Industry and Markets Division in 2010, contributing to the benchmark monthly Oil Market Report and annual Medium-Term Oil Market Report. The Oil Market Report for December will be distributed on 18 December.

The International Energy Agency (IEA) produces IEA Energy, but all analysis and views contained in the journal are those of individual authors and not necessarily those of the IEA Secretariat or IEA member countries, and are not to be construed as advice on any specific issue or situation.

photo by MD111

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