The global oil market is becoming increasingly regional at the moment, as armed attacks in the Red Sea and rising shipping rates make supplies from the nearest supplier more attractive.
The decline in the movement of oil tankers through the Suez Canal leads to the beginnings of division, with a commercial area around the Atlantic Basin that includes the North Sea and the Mediterranean, and another area that includes the Arabian Gulf, the Indian Ocean, and East Asia.
Crude oil is still transported between these two regions - via the longer and more expensive journey around the southern tip of Africa - but recent buying patterns indicate a disconnect between them.
Across Europe, some refiners abandoned purchases of Iraqi Basra crude last month, according to traders, while buyers from the continent are buying cargoes from the North Sea and Guyana.
In Asia, a jump in demand for Murban crude from Abu Dhabi led to higher spot prices in mid-January, and flows from Kazakhstan to Asia fell sharply.
Meanwhile, crude oil shipments from the United States to Asia fell by more than a third last month compared to December, ship tracking data from Kpler shows.
The separation will not be permanent, but for now it makes it more difficult for import-dependent countries such as India and South Korea to diversify their sources of oil supplies. For refiners, this limits their flexibility to respond to rapidly changing market dynamics, and can ultimately erode profit margins.
Oil tankers crossing the Suez Canal decreased by 23% in December from November. The decline was more pronounced for liquefied petroleum gas, which fell by 65%, and liquefied natural gas, which fell by 73%.
In product markets, flows of diesel and jet fuel from India and the Middle East to Europe, and European fuel oil and naphtha to Asia were most affected. Prices of naphtha, a raw material used in petrochemicals, hit their highest levels in nearly two years last week amid fears that it will be difficult to obtain from Europe.
The Red Sea attacks affect oil prices through higher shipping costs, which encourages refiners to go regionally wherever they can. Suezmax crude oil tankers from the Middle East to northwestern Europe have jumped by about half since mid-December. Brent crude, the global benchmark, rose by about 8% during the same period.
At the same time, the cost of delivering oil to Asia from the United States, where production is increasing, rose by more than $2 a barrel over a three-week period in January, according to traders participating in the market.
The situation in the Red Sea is not expected to rearrange oil flows in the long term, but it is also difficult to see a solution to the conflict soon. Instead, there is a high risk of further unrest, especially after the Houthi movement attacked a tanker carrying Russian fuel late last month. This attack was noteworthy because the Iran-backed militant group had indicated that it would not target Russian or Chinese ships.