Energy Security Sentinel
An interactive study of geopolitical risk and energy prices
Ongoing conflicts in Europe and the Middle East shine a spotlight on risks to energy and shipping markets in this latest update of the Energy Security Sentinel by S&P Global Commodity Insights.
The Israel-Hamas war has led to a barrage of maritime attacks on commercial shipping.
The vessel strikes and seizures are happening in the world’s epicenter of oil and gas production, with Iranian-backed Houthi militia in Yemen disrupting flows through the Bab al-Mandab Strait chokepoint at the southern end of the Red Sea and creating potential environmental hazards.
Many major shipping and energy companies are now avoiding the region, choosing instead to reroute cargoes around Africa – a voyage that adds thousands of miles and significant costs.
Meanwhile in Europe, hostilities have also ramped up in the Russia-Ukraine war, with Kyiv carrying out a series of long-range strikes on oil infrastructure deep within Russian territory.
Russia’s invasion has resulted in punishing US and European sanctions targeting crude and oil products, with major changes to trade flows and production volumes. Active fighting has targeted oil and gas fields, refineries, power plants and supply infrastructure.
The conflict has particularly reverberated in the European gas market, although prices have fallen significantly from record highs in summer 2022.
The Red Sea flashpoint is a reminder that the bloody conflict raging in the Middle East still has ways of impacting oil markets.
Security Trackers
Data presented in the S&P Global Energy Security Sentinel shows a spike in the number of incidents in the Middle East in 2024, with more than 80 ships targeted in the southern Red Sea, Bab al-Mandab Strait and Gulf of Aden.
But Yemen-based Houthi militants have ramped down their attacks on merchant ships in recent months as the Israel-Hamas war is coming to a conclusion, at least temporarily, even as ship operators are slow to resume their normal voyages through the Suez Canal due to security concerns.
The security risks have prompted many ships across the energy, container and dry bulk sectors to take the longer Cape of Good Hope route, supporting freight rates and bunker consumption. Market participants expect normal traffic to resume only gradually in the coming months if the Houthis refrain from further attacks.
Prior to the reemergence of threats to oil shipping, the geographical range of security events in the Middle East was seen spreading across the Arabian Peninsula to Iraq and Syria.
Since 2017, the Gulf of Oman, Red Sea and the Bab al-Mandab chokepoint have experienced the majority of maritime attacks, while northern Iraq has seen sporadic hits to gas fields and processing facilities, and Saudi Aramco and Abu Dhabi National Oil Co. have suffered isolated major damage.
A total of 235 incidents in the Middle East have been verified and reported by Platts news through February 2, 2025, with support from Maritime Intelligence Risk Suite. Almost two-thirds of attacks in the region reported by S&P Global Commodity Insights were recorded as hits.
War in Ukraine
Russia's invasion of Ukraine continues to ripple across commodity markets. The conflict has seen production and supply disrupted, as both sides target infrastructure in the conflict zone and beyond.
Since the start of 2024, Ukraine has become increasingly aggressive in targeting Russian oil facilities, including refineries and oil depots far from the border, marking a heightening of Kyiv’s capabilities.
Meanwhile Russia continues to focus on taking out Ukrainian power capacity, with waves of attacks leading to frequent blackouts and forcing Ukraine to increase imports from the EU.
Previous targets since the conflict began include grain facilities, shipping in the Black Sea and Russian oil and gas supplies to Europe. Attacks have now been recorded on the Danube, in the Baltic and Black Seas, as well as across Ukraine and Western Russia.
In total there have been 238 security incidents tracked by S&P Global Commodity Insights since the conflict began.
Spare capacity shield
The Russia-Ukraine war initially added to growing concerns over dwindling spare capacity for both oil and gas. Sanctions on Russia have hit upstream production and pushed more of the country's benchmark medium sour Urals crude into Asia, sold at a discount to Dated Brent, with the G7’s price cap on Russian crude and fuels aimed at limiting Moscow’s war chest.
But recent steep production cuts made by the OPEC+ alliance to bolster prices have padded the global oil market’s spare capacity buffer. The bloc led by Saudi Arabia and Russia is implementing 2.2 million b/d of voluntary production cuts, currently in force until at least April 2025.
The output restraint gives the OPEC+ alliance more leeway to relieve tight market balances, should it choose to do so. OPEC+ spare capacity remains concentrated in Saudi Arabia and the UAE, underscoring the Middle East’s critically important role as a supplying region.
The Middle East accounts for over 30% of the world's supply of seaborne crude but the impact of security incidents on oil infrastructure in the region on the price of physical oil has been modest. Oil futures almost tripled at the peak of hostilities during the Tanker War in 1984. The 2019 attacks on Saudi Arabia's vital Abqaiq processing facilities led to only a 13% increase in prices.
Meanwhile, Russia's invasion of Ukraine saw oil prices peak close to $140/b in March 2022 and natural gas prices in Europe more than triple that summer.
Spare capacity is defined by S&P Global Commodity Insights as crude voluntarily held offline, but available to be brought back into production within 90 days excluding its near-term forecast for US shale.
Global spare capacity now rests at 5.7 million b/d, or roughly 6% of global production capacity.
In response to the conflict in Ukraine, the US and other IEA members have also released significant volumes of crude from their strategic petroleum reserves to ease pressure on consumers.
When it comes to the Middle East, the Platts Dubai benchmark, which celebrates its 40th anniversary this year, is the primary pricing reference for nearly all the region’s oil exports to Asia. Having five deliverable crude grades in Platts Dubai ensures that there is suitable availability of crudes to meet spot market demand.
The growing prevalence of attacks since 2015 has also coincided with increased volatility across oil markets.
Russia's invasion of Ukraine has again highlighted the growing importance of energy security, global strategic petroleum reserves , greater diversity of supply and the resilience of major producers like Saudi Arabia. However, these measures have failed to prevent surges in volatility, adding to inflation and pressure on the global growth.
Cybersecurity attacks
Cyber threats to the energy industry have escalated over the last decade, with hackers seeking to steal data and paralyze the flow of resources.
S&P Global Commodity Insights tracked 101 since the start of 2017, with 23 and 26 such incidents taking place in 2024 and 2023 respectively.
More than 60% of the attacks across the sector have been on industries connected to oil and power, with gas, shipping and petrochemicals also heavily impacted.
Around 20% of cybersecurity incidents were targeted at US-based operations, but Russia, the Middle East, Asia, Africa and Europe also suffered, the data showed.
Cyberattacks have emerged as a growing threat to commodity supply chains and companies are starting to prioritize cybersecurity.
War, sanctions & climate
Russia's invasion of Ukraine has proved that no oil producing basin is immune to supply disruptions. According to analysis by S&P Global, the equivalent of approximately 4.48 million b/d of crude, which accounts for just under 5% of world supply, has been displaced temporarily due to a mixture of security incidents, such as attacks, geopolitics and adverse weather events over the last five years.
The market impact from Russia’s invasion of Ukraine differs dramatically from most geopolitical supply disruptions since 1973, as export dislocations and potential production shut-ins are triggered entirely by consuming countries voluntarily restricting oil supply.
Policy choices of Russian energy buyers may accelerate the eventual transition to alternative supply sources, but intense political pressure to avoid higher prices will likely continue to dominate decisions, particularly in the current inflationary economic environment.
Vulnerable producers
By far the largest share of global supply disruption over the last five years has been focused on Russia, Venezuela, Nigeria, Libya, Iraq and Iran. Combined, these vulnerable producers account for 2.56 million b/d of lost output in 2023, according to the data.
Despite sanctions on Russia, Iran accounts for the largest share of lost exports due to the imposition of international sanctions, which have removed about 1 million b/d of output. All six vulnerable producers are OPEC+ members and under normal circumstances combined would account for around a fifth of total global supply.
Chokepoints
More than half of the world’s oil supply is transported via a number of important but vulnerable waterways. Known as chokepoints, they can be circumvented by other routes but not without substantial disruption in terms of cost and transit time. Some of these arteries are so narrow there are restrictions on the size of vessels and some have very limited pipeline alternatives and lengthy seaborne options.
With ships diverted from the Red Sea amid worries over Houthi attacks, oil flows through the Cape of Good Hope route rose to 8.4 million b/d in 2024 from 6 million b/d in 2023. The trend might be reversed in 2025 due to an Israel-Hamas ceasefire deal.
The canal connecting the Pacific Ocean to the Atlantic transported around 2 million b/d in 2024 compared with 1.9 million b/d in 2023, when low water levels due to drought conditions had caused a dip in transit volumes. In 2016, the Panama Canal was expanded allowing for the transit of larger ships, but very big vessels such as Very Large Crude Carriers (VLCCs) still cannot pass through it. The canal has also emerged as a key bunkering hub over the past few years.
The Danish Straits are a series of channels connecting the Baltic Sea to the North Sea and are an important route for Russian seaborne oil exports. Around 5 million b/d of crude oil and petroleum products are transported through it, but the volumes could be affected by European countries’ clampdowns on Russia’s shadow fleet in 2025. Russia’s flagship crude grade Urals is transported through these waterways.
The Turkish Straits, which consist of the and the , are regularly used for shipping oil from the Black Sea to western and southern Europe. This is a key transit point for crude oil from Russia and Kazakhstan, which is exported from the Black Sea port of . These straits are only a half-mile wide at their narrowest point, limiting the types of vessels able to navigate through. During the northern hemisphere winter, some large vessels are only allowed to transit during daylight hours and this can cause a long queue. Despite its limitations, more than 3 million b/d of crude oil and petroleum products flow through the Turkish Straits.
The key commodity chokepoint connecting the Red Sea with the Mediterranean accounts for almost 10% of total seaborne oil trade and almost 8% of LNG trade in normal times. However, transit volumes of crude oil and petroleum products halved to 3.9 million b/d in 2024 from 7.9 million b/d in 2023 as a large number of ship operators steered away to avoid Houthi attacks. Normal traffic could be restored if the Israel-Hamas ceasefire deal lasts well into 2025.
The 21-mile wide Strait of Hormuz is the key maritime transit route for Persian Gulf oil exporters, with more than 19 million b/d of seaborne crude, condensate and refined product exports passing through the artery along with almost 11 Bcf/d of LNG. Iran has occasionally threatened to close the chokepoint in recent years. In the region, only Saudi Arabia, the UAE, Oman and Iran have alternative access routes to maritime shipping lanes.
BIMCO and other major shipping industry associations have recommended through the Strait of Hormuz amid a rising threat to shipping from Iran. The recommended transit route, which is optional, avoids the official UN shipping lanes through the chokepoint to skirt Iranian waters.
Attacks by Iranian-backed Houthi militia on commercial shipping in the southern Red Sea since late 2023 have highlighted the risks of flows through this chokepoint, a critical conduit between markets in the global East and West. Many shippers and some oil companies, including BP, have rerouted their cargoes via the Cape of Good Hope in response to the rise in maritime attacks. The Bab al-Mandab saw 2.5 million b/d of crude, condensate and refined petroleum products transit in 2024, nearly two-thirds lower than 6.9 million b/d in 2023. Ship traffic could increase throughout 2025 if the Houthis halt their attacks for an extended period due to an Israel-Hamas ceasefire deal.
This route supplies oil to some of the world's largest importers like China, Japan and South Korea. Malacca is the primary chokepoint in Asia. The channel between Indonesia, Malaysia, and Singapore, links the Indian Ocean with the Pacific. It is also the shortest sea route between Persian Gulf suppliers and key Asian markets. The region is viewed as a hotspot for piracy and maritime kidnappings. Security in the region has been a priority for China, which depends on Middle East oil. In 2003, former Chinese President Hu Jintao coined the phrase "Malacca Dilemma", which relates to Beijing's reliance on foreign oil. Around 24 million b/d of crude and refined products flows through it, ranking it above the Strait of Hormuz as the world biggest global oil chokepoint.
Europe
Energy crisis unfolds as dependence on Russia exposed
Energy security in Europe was thrown into turmoil by the war in Ukraine, as Russian gas supplies dropped sharply. The benchmark TTF month-ahead gas price hit an all-time high of Eur319.98/MWh ($351/MWh) on Aug. 26, 2022, putting European economies and energy policymakers under pressure. Since then, prices have come down but remain historically high, with the end of Russian gas supplies via Ukraine to Europe on Jan. 1, 2025, adding renewed price pressure.
The TTF month-ahead price hit a two-year high of Eur58.14/MWh on Feb. 10.
In response to supply risks, countries in Europe scrambled to secure alternative supplies including more flows of LNG and attempts to boost domestic production.
Europe has also increased LNG import capacity since the start of 2022. This includes new floating import infrastructure, including four FSRUs in Germany, two in the Netherlands and new terminals in Italy and Finland. Concerns over supply persist, however, including over restocking in summer 2025 with storage levels in winter 24/25 having dropped more quickly than in the past two years.
EU member states are also still required to meet storage filling targets, with Brussels setting a 90% fullness obligation by Nov. 1, 2025. However, a number of EU countries – including Germany – have said they would prefer less rigid storage filling requirements, with the European Commission considering promoting more flexible storage rules.
After the transit deal between Russia and Ukraine expired at the end of 2024, Europe lost a total of around 15 Bcm/year of Russian supply for 2025. Russian pipeline gas exports to Europe had already fallen from 136.7 Bcm in 2021 to 28.5 Bcm in 2024.
Part of this decline was due to the suspension of supplies via the Nord Stream pipeline system as a result of sanctions in summer 2022 followed by attacks on two of the strings of Nord Stream and one of the strings of Nord Stream 2 in September of that year.
Russian gas and LNG were not initially sanction targets , but in 2024 the EU prohibited future investments in Russian LNG projects, and transshipment of Russian LNG at EU ports from the end of Q1, 2025.
The Arctic LNG 2 project has been sanctioned and US sanctions on the Portovaya and Vysotsk LNG projects also came into effect in February 2025.
Meanwhile, Russia is eyeing alternative markets for displaced gas volumes such as China. Gazprom is developing new export infrastructure to supply the world's second-largest economy and planning a new route into the Asian market via Mongolia. Russia is also planning a significant increase in LNG output to be shipped via the Northern Sea Route, which runs through Russian territorial waters and is quicker and cheaper than other supply routes. This comes as LNG shipments through the Red Sea and the Suez Canal could be squeezed by a continued escalation in maritime attacks by Yemeni Houthi militia in response to the Israel-Gaza war.
A higher reliance on LNG in Europe increases the risk of winter price spikes. Cold weather spells lasting more than two weeks or significant drops in LNG deliveries will increase the risk of significant upside price movements in winters in the absence of flexible backstop supply from Russia.
Power prices have tracked wholesale gas across Europe, with major economies like the UK, Germany, France and Spain particularly impacted through 2022. From 2023, however, improving nuclear and hydro availability combined with lower gas feedstock costs and weak demand to draw power prices lower.
With limited flexibility in the gas generation fleet, power sector demand has become much less price responsive and much more subject to the vagaries of renewable generation patterns and electricity demand movements.
Europe shifts away from Russian oil
Russia’s invasion of Ukraine has led the EU to phase out most oil and petroleum product imports from Russia. The region accounted for almost half of Russia's petroleum exports before the war triggered the introduction of sanctions, averaging 15.2 million mt monthly from 2019 to 2022, according to Eurostat data.
In September 2023, the volume of petroleum oil imported from Russia to the EU was 16% of what it had been in January 2021, when Russia was the largest supplier to the union, Eurostat data showed.
In response, Russia has redirected more crude flows into Asia. Maritime export flows to India reached a record high of 1.69 million b/d in 2024, according to S&P Global Commodities at Sea data.
Seaborne exports to China averaged 1.2 million b/d in 2024, up from 1.17 million b/d in 2023.
Carrying Russian crude some 4,000 km, Druzhba is one of the world's biggest oil pipeline systems and a vital supply route for Europe. Prior to Moscow's invasion of Ukraine, Urals crude exports via the pipeline network averaged 1 million b/d under normal circumstances, according to Russian energy ministry data. About 70% of these flows had travelled through the northern route pipeline route to Belarus, Poland, and Germany.
However, the conflict led many European countries, including Poland and Germany to phase out Russian crude imports, supplied via the northern branch of Druzhba. In June 2023 such supplies were included in EU sanctions, ending the possibility that they may resume. Limited volumes of Russian crude continue to flow to the Czech Republic, Slovakia and Hungary via the southern branch of Druzhba.
Since the conflict began, Kazakhstan has started supplying crude to Germany via Druzhba, committing to sending 1.2 million mt of oil through the pipeline in 2023.
Russia
Russia Sanctions
Following the invasion of Ukraine on Feb. 24, 2022, Russia found itself quickly isolated by a predominantly Western coalition of partners led by the US, the EU and the UK. Countries quickly slashed imports of Russian oil and gas.
US President Donald Trump’s return to office raises the likelihood that Russia will be given some sanctions relief as part of negotiations to end the conflict in Ukraine.
EU officials have said that they will continue with plans to phase out Russian fossil fuel imports by 2027, regardless of progress in these talks.
The EU alone was importing about 2.3 million b/d of Russian crude before the war in Ukraine. Russia is now under tough international sanctions designed to choke off its access to the international financial system and make it harder to trade in Russian commodities.
From Dec. 5, 2022, the EU banned most seaborne Russian crude imports. The EU, G7 and Australia also approved a $60/b price cap for Russian crude.
From Feb. 5, 2023, the EU banned imports of most Russian refined products. The EU, G7 and Australia also approved price caps of $100/b on products that typically trade at a premium to crude, and $45/b on those that generally trade at a discount to crude.
Russia responded by banning oil sales that are conducted under price caps. Despite these sanctions Russian crude has traded above the $60/b price cap, averaging $65.59/b in 2024. Major oil and gas consuming nations in Asia, primarily China and India, have refused to join the international push to choke off Russia's ability to sell oil. Russia has developed an extensive shadow fleet to continue to supply oil to global markets. Recent sanctions actions have targeted these vessels.
A ceasefire that included significant sanctions relief wouldn’t necessarily unlock any disrupted streams of oil because Western sanctions on Russian oil have generally been constructed to try to limit Moscow’s oil revenues to the extent possible while keeping crude flowing to markets.
Russia's invasion of Ukraine has highlighted new risks to global energy security. Prior to the war, the Kremlin's growing role in global oil and energy security had been underscored by its partnership with OPEC. The OPEC+ crude production agreement sees two of the world’s three biggest crude producers – Russia and Saudi Arabia – coordinate output volumes alongside other smaller producers.
The alliance has survived through major Western pressure to cut Russia’s oil and gas revenues, which are key to the state budget. In response to EU import embargoes and G7, EU and Australian price caps, Russia has lowered crude production in coordination with some other OPEC+ producers.
Russia produced 8.96 million b/d of crude in January 2025, according to the Platts survey of OPEC+ production by S&P Global Commodity Insights. This is down from 10.11 million b/d in February 2022 – the month that Russia launched its invasion of Ukraine.
The key to OPEC+ unity is the Saudi-Russian relationship. OPEC+ does not work effectively if Saudi Arabia and Russia are not aligned.
The conflict has hit prices for Russia’s key crude grade Urals, which was trading more than $40/b below Dated Brent by early April 2022. But the discount has since narrowed significantly, and was at around $15/b in February 2025.
For gas, the conflict has reshaped Russian supply routes into Europe, with deliveries shifting away from transit through Ukraine and the Baltic Sea. Tensions with Russia suspended certification of the . And sabotage attacks in September 2022 on both Nord Stream lines and one line of Nord Stream 2 rendered them unusable.
Flows via the linking Russia and Turkey now account for all Russian pipeline deliveries to Europe. Exports via the route totaled 1.45 Bcm in January 2025. The main buyers of supplies via TurkStream are Hungary and Serbia, both of which still have relatively close ties with Moscow. Russian gas via TurkStream can also be delivered to Romania, Greece, North Macedonia and Bosnia and Herzegovina.
Saudi Arabia
Saudi Arabia’s commitment to maintain at least 2 million b/d of spare capacity plays a critical role in balancing the oil market and prices during periods of stress. Despite the rising number of security incidents recorded since 2017 involving the kingdom's oil infrastructure, disruptions to its exports have been minimized. This resilience underpins Saudi Arabia's status as a stable supplier in a volatile region.
The kingdom's main Arab Light and Arab Medium crude grades produced from the , the world's largest onshore production site, are the most widely consumed grades in Asia. Low-level security events in the kingdom onshore have targeted multiple facilities both upstream and downstream including its East-West pipeline, built to transport crude to petrochemical and refinery plants in Yanbu.
The and refineries have both been singled out as targets partly due to their proximity to Yemen and their symbolic status within the kingdom's energy industry. Heavily guarded facilities at Abqaiq were also targeted showing the geographic spread of security incidents.
But following a flurry of diplomacy between Saudi Arabia and Iran throughout 2023, attacks on the kingdom’s energy infrastructure have died down, after seven recorded incidents documented by S&P Global in the first half of 2022.
Iran
Sanctions have blighted Iran's oil, petrochemical and shipping sectors. Stringent unilateral measures imposed by the US from mid-2018 led to more than 1.5 million b/d in Iranian crude output taken out of circulation, as the OPEC producer’s output slumped from in excess of 3.80 million b/d.
There was some relief when Western countries’ sanctions focus moved to Russia due to its invasion of Ukraine. Iranian crude output volumes rose from 2.52 million b/d in January 2022 to 3.20 million b/d in January 2025.
This trend is likely to reverse after US President Donald Trump returned to office in January 2025. Trump has threatened to apply maximum sanctions pressure and drive Iran’s oil exports to zero.
China is the key market for Iran's crude, which is mostly sour in quality due to a higher sulfur content in its main grades. Iranian crudes also have a higher specific gravity and are classified as heavy or medium, with gravities ranging from 27 to 34 API.
Besides China, Iran has also shipped large volumes of its condensate to fellow sanctioned OPEC member Venezuela, which uses the ultralight oil as diluent to produce and upgrade its extra heavy crude. Much of the condensate volumes have come out of the significant volumes of floating storage that accumulated during sanctions.
Iran's key fields
The Islamic Republic is home to the first commercial oil well drilled in the Middle East. The Anglo-Persian oil company struck oil at Masjid Solaiman in 1908 and the concession would ultimately lead to the creation of the international oil major now known as BP. According to OPEC, Iran has proven reserves of 208 billion barrels.
Today the country's key oil fields are located in the south and near its border with Iraq. Fields in the West Karun region – North Azadegan, South Azadegan, North Yaran, South Yaran and Yadavaran, located near the Iraq border – are considered strategically important.
Iraq
Internal divisions and militancy have plagued the country’s oil sector in recent years. Attacks on infrastructure reached a peak in 2014 when Islamic State militants seized control of the giant Baiji refinery north of Baghdad. Since its recapture in 2015, revenue and production disputes between the federal government and semi-autonomous Kurdistan region have led to repeated disruptions. Sectarian violence in the OPEC’s second-largest producer has also emerged as a key security risk.
Iraq is competing fiercely for greater market share with major customers such as India and China, where its Basrah Medium grade, is a popular choice with refiners. SOMO created the new medium stream in early 2021 by splitting Basrah Light, which is no longer exported, in two to preserve the stability of its grades and meet growing customer demand.
Basrah
Oil producing areas such as the Basrah province – which is home the country’s key oil fields, Rumaila, West Qurna 1, Zubair, Majnoon, West Qurna Phase 2 – are vulnerable to disruptions and protests, given the problems with power outages in OPEC’s second-largest oil producer. The southern oil terminals of Khor al-Amaya and Basrah have also faced issues arising from old infrastructure, shallow waters, and general congestion in Iraq's narrow territorial waters.
Kurdistan region of Iraq
The country’s semi-autonomous Kurdistan region has faced violence from both the PKK and Islamic State militants in the past decade. The 600,000 b/d Kirkuk-Ceyhan pipeline and the Kirkuk oil fields, especially Avana Dome and Bai Hassan, have been prominent targets.
Production in Kurdistan has been heavily affected by a dispute between Iraq and Turkey that led to suspension of exports via the port of Ceyhan. This cut supplies of around 400,000 b/d of medium sour Kurdish crude and Iraqi Kirkuk crude to the Mediterranean market.
Key fields and energy infrastructure in Kurdistan have been periodically targeted by Iranian-backed groups over the KRG’s efforts to further its autonomy through expanded oil and gas sales.
Libya
The North African producer has seen little peace and stability since the fall of Moammar Qadhafi in 2011, with warring factions shutting down oilfields, disrupting pipelines and blockading ports. Crude output fell from 1.6 million b/d in 2010 to hit a low of 100,000 b/d 2020.
Oil production largely stabilized from 2023 onwards, but the situation is fragile as Libya’s lifeblood energy industry remains at the center of a political tug-of-war between rival governments in the west and east of the country, as well as militias, as evidenced by a weeks-long full scale shutdown in late 2024. Relationships between key political actors, including the heads of the National Oil Company, the Central Bank, powerful warlords and the Tripoli-based prime minister and oil minister tend to determine the health of the oil sector, which accounts for some 93% of government revenue.
The risk of renewed unrest and disruptions remains, with intermittent port blockades and field shutdowns still likely, along with issues related to the country's aging oil infrastructure. Production is hovering at about 1.19 million b/d, with the NOC targeting 2 million b/d by 2029.
Sharara is Libya’s largest oil field, connected to the Zawiya refinery and export terminal. Other key terminals are Brega, Ras Lanuf, Marsa el-Hariga, Zueitina and Es Sider. Much of the country’s oil is pumped by IOCs in joint ventures with the NOC. Demand for Libya's light sweet crude is especially strong especially in the Mediterranean and Northwest Europe.
Timeline
Seizure of oil terminals and fields marked an escalation of the conflict between forces controlled by General Khalifa Haftar and the Government of National Accord. Haftar gained control of the country's main economic lifeline.
A faction of the Petroleum Facilities Guards, along with a group called the Fezzan Anger Movement, shutdown the country's largest field, Sharara, in December after the LNA gained control of key export terminals on the coast.
Haftar's forces gain control of most oil infrastructure and effectively encircle the GNA in the capital Tripoli. Uncertainty, over the country's output pushes crude prices higher before the COVID-19 pandemic sees global demand crash.
The country's oil and gas revenues plummet by 92%. Haftar's forces effectively shutdown the country's entire oil industry to pile pressure on the GNA, with output falling to 100,000 b/d before recovering later in the year.
Production recovered to around 1 million b/d despite sporadic closures of facilities amid ongoing protests and unrest. Longer term National Oil Corporation said it has the ambition of increasing production to 1.6 million b/d within two years and 2.1 million b/d within 3-4 years.
Production stabilizes following the appointment of NOC chairman Farhat Bengdara, cementing an agreement between western and eastern factions. But nationwide oil shutdown due to Central Bank dispute halves output. Bengdara resigns, spelling further uncertainty for sector.
Nigeria
Nigeria's oil industry has suffered from decades of uncertainty caused by militant attacks on pipelines and infrastructure in the restive Niger Delta. Spills prompted by sabotage and theft have turned the region, estimated to hold 34 billion barrels of proven oil reserves, into one of the most polluted places on earth, according to Amnesty International.
Africa's largest producer has the capacity to pump around 2.2 million-2.3 million b/d of crude and condensate, but production has averaged only 1.46 million b/d in 2024, according to S&P Global Commodity Insights estimates. Nigeria has had to deal with a barrage of security, operational, and technical problems at its ageing oil infrastructure since early 2021. Meanwhile, the IOCs that built the Nigerian oil sector are looking to divest from onshore and shallow-water assets.
Key grades of crude produced in Nigeria fall into the light-sweet and medium-sweet categories and include Bonny Light, Escravos, Forcados, Qua Iboe, Brass River, Agbami, Akpo and Egina. The main markets for these Nigerian grades are in Europe and the Asia-Pacific region, according to the Platts Periodic Table of Oil.
In Q1 2024, the colossal $20 billion came online outside Lagos. The 600,000 b/d, long-delayed project, which processes Nigerian and US crude, is looking to end Nigeria’s dependence on refined product imports and is set to shake-up international crude flows. It should also close a huge regional illicit market for gasoline imported by Nigeria and subsidized by Abuja.
Piracy hotspot
Explore attacks by year:
The Gulf of Guinea , stretching from Angola to Liberia, includes Africa’s biggest oil producers – Nigeria, Equatorial Guinea, Gabon, Ghana and Cameroon. The area accounted for 22% of all reported piracy and robbery incidents globally in the first half of 2023, according to data from the International Maritime Bureau Piracy Centre.
The attacks tend to be focused on vessels carrying refined products rather than much larger crude oil tankers, although they have also been targets. A large proportion of the attacks involve kidnapping for ransom, but pirates are also reported siphoning fuels from captured vessels.
West Africa depends heavily on fuel imports, meaning there is always a steady stream of tankers carrying refined oil products. The UK Continent to West Africa route for clean tankers – those carrying refined oil products – has been a lucrative business for some tanker owners.
Nigeria's main oil producing region around the Gulf of Guinea is the Niger Delta . The area is a frequent target of piracy and attacks. A presidential amnesty program for militants, intended to maintain peace in the Niger Delta, remains in place, but there are concerns over resurgent activity. Militancy in this region has remained dormant in recent years but infrastructure sabotage and theft persist. Key exports terminals such as Bonny, Qua, Escravos and Forcados have all been popular targets of attacks and sabotage.
Venezuela
Venezuelan crude production has been crippled by US sanctions along with underinvestment, technical problems and labor issues. Output stands at around 900,000 b/d, down from 1.3 million b/d when US oil sanctions started in January 2019 and from 2.5 million b/d five years ago.
Venezuela's state-owned PDVSA has been struggling to keep oil flowing in the country's main fields in the face of high inventories, crippled refineries, equipment theft and worker absenteeism. The country has also had difficulty securing diluents to blend with its heavy crude, and its refining sector has almost come to a standstill in recent times, making it very reliant on refined product imports. US sanctions against companies, which had provided critical financing to Venezuela’s oil sector, have also resulted in the closing of high-cost wells, though the Biden administration has relaxed some measures, allowing production at some Orinoco Basin wells to resume.
These waivers could be lifted under the new administration, however. On his first day in office US President Donald Trump said that the US would likely stop purchases of Venezuelan oil.
Venezuela has received support from its fellow sanctioned countries Iran and Russia.
