Asian oil demand tightens European and African crude markets

Global crude markets are showing increasing signs of tightness as Asian oil demand continues to rise sharply amid ongoing disruptions in Middle Eastern supply routes. 

With peak summer consumption approaching, buyers across Asia are seeking alternative sources of crude, putting pressure on supplies traditionally destined for Europe and Africa.

The situation has intensified following the effective closure of the Strait of Hormuz, which has now disrupted flows for roughly five weeks. 

The conflict involving Iran has forced the shutdown of at least 10 million barrels per day of oil production, equivalent to roughly 10% of global daily consumption. These disruptions have tightened availability across multiple regional markets, according to Reuters.

Benchmark prices reach historic levels

The impact of these supply constraints is already visible in global price benchmarks. 

The Dubai crude benchmark surged to $169.75 per barrel on March 23, surpassing the previous Brent futures record of $147.50 set in 2008 and marking the highest benchmark crude price ever recorded.

Physical crude markets are also reflecting the shortage. 

North Sea Forties crude recently traded at a $7.20 per barrel premium over Brent, the highest differential on record, according to data from LSEG.

Derivatives markets are reinforcing the signal of tight supply. 

The first week of the Brent contracts-for-difference (CFD) curve, which reflects the value of prompt physical crude, reached $12.35 per barrel above the six-week forward contract on March 27, another record level.

As former International Energy Agency oil markets head Neil Atkinson summarized:

“Globally, there are fewer barrels available, so those who need them are driving up prices.”

Asian buyers redirect global crude flows

Asia has been the region most affected by supply disruptions due to its heavy reliance on Middle Eastern crude imports. 

As a result, Asian refiners are increasingly sourcing barrels from Europe and West Africa, reshaping global crude trade flows.

Analysts at Morgan Stanley report that the diversion of supply toward Asia is tightening availability for European buyers.

According to the bank, a growing portion of West African crude, which can typically move between European and Asian markets depending on price signals, is now being redirected eastward to meet Asian demand.

Market pricing reflects this shift. WTI Midland crude, widely used as a benchmark for Brent-linked deliveries in Europe, traded at a record $9.50 per barrel premium to Brent, nearly $8 higher than levels seen before the conflict began.

Asian oil demand tightens European and African crude markets

Shipping data confirms the shift

Shipping and trade data further confirm the redirection of global energy flows.

According to Kpler, shipments of crude and refined products heading to Asia from Europe and major West African producers such as Angola and Nigeria are expected to increase by approximately 200,000 barrels per day in March compared with February, reaching 3.72 million barrels per day.

Several cargo diversions illustrate the competition for available supply.

In recent weeks, four tankers carrying 168,000 tons of U.S. diesel and gas oil were redirected from Europe to South Africa, according to consultancy Energy Aspects.

Additionally, four tankers carrying a combined 430,000 tons of diesel from the Middle East and India initially bound for Europe changed course toward Southeast Asia, reflecting shifting price incentives and supply shortages.

Gasoline markets are also responding. European gasoline shipments have increasingly moved toward Asia after regional fuel prices surged due to tightening supply conditions.

A tighter global market

Together, these developments highlight the growing competition for available crude supplies across global markets. 

With Asian refiners actively seeking alternative barrels and Middle Eastern flows constrained, supply traditionally allocated to Europe and Africa is increasingly being redirected.

The result is a tighter global crude market, rising price differentials, and a reshaping of energy trade routes as buyers compete for limited barrels.