Global energy market showing’ surprising resilience’, despite war in Ukraine

The global energy market is showing ‘surprising resilience’ despite predictions of a crisis prompted by the war in Ukraine, says climate technology company Kayrros.

Satellite data from Kayrros, a leader in environmental intelligence and a partner in methane tracking work of the International Energy Agency and United Nations Environment Programme, show that onshore stocks of crude oil have risen by an average of 400,000 barrels a day since Russia launched its invasion of Ukraine in February last year.

Despite predictions of a worldwide energy crisis, the crude oil market at least has weathered the geopolitical shocks of the past 12 months, albeit at the cost of a sweeping transformation in crude trade flows. The surprising build in global crude inventories has taken place against a backdrop of OPEC supply cuts and rising demand for oil.

Kayrros co-founder and Chief Analyst Antoine Halff, said that China, thanks to its huge storage capacity, had played a ‘key role’ in rebalancing the market, emerging as a top buyer of Russian crude and the ‘de facto global swing supplier’.

He added that independent data was vital to understanding the complex movements of the global energy market.

“What our data show is that overall Russian crude export volumes have not been meaningfully affected by international sanctions,” he said.

“Oil trade flows have simply been rerouted—mostly to China, which has enormous storage capacity and has recently raised its crude import quotas to increase its import of Russian oil.

“It’s a major reason why predictions that the Ukraine war would trigger a global energy crisis have not come true as far as the crude oil market is concerned.

“It points to the need for independent, verified, and high-quality data. Without the right information, you can’t understand the energy landscape or make sound decisions.”

Data from Kayrros, which brings extensive experience and expertise in geoanalytics and AI, show that the state-owned Chinese refiner Sinopec’s crude stocks hit an all-time high last year.

Sinopec’s dominance of the Chinese inventory response to the Ukraine war stems from its towering position in the Chinese refining industry, but could also reflect an effort on the part of the government to rein in private companies and reassert state control over the national economy, Kayrros said.

Chinese independent refiners, which played the leading role in driving up Chinese crude inventories at the onset of the Covid-19 pandemic, were much more in the background this time around.

In contrast with global stocks, Chinese crude inventories have not changed noticeably from pre-invasion levels, increasing by around 20 million barrels, or 60,000bpd. The build in global crude stocks has recently been accelerating, Kayrros said, rising to 760,000bpd so far in 2023.

Kayrros uses satellite imagery, AI, and geo-analytics to help governments, investors and businesses understand the risks posed by the changing climate and energy landscapes and make more informed decisions.