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The crude oil transportation market involves the movement of unrefined crude oil from production sites and export terminals to petroleum refineries. Crude oil is shipped via pipelines, oil tankers, rail tank cars and oil tank trucks to undergo processing and conversion into value-added petroleum products like gasoline, diesel and jet fuel. As energy consumption continues to grow globally driven by industrialization and economic development in emerging economies, the demand for crude oil transportation services is also rising. Crude oil transportation plays a vital role in enabling the global supply of petroleum and energy security.
Key modes of crude oil transportation include oil pipelines which provide the most cost-effective way to move large volumes over long distances on land. Oil tankers are most commonly used for offshore and international shipments between export terminals and import facilities. With increasing shale oil production in North America, transport of crude by rail and tank trucks has also increased to deliver supplies to refineries.
The global crude oil transportation market is estimated to be valued at US$ 21.58 Bn in 2023 and is expected to exhibit a CAGR of 6.0% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market key trends:
The key trend in the crude oil transportation market is the rise of long-haul crude oil pipeline networks. Major pipeline companies are actively expanding their pipeline footprints to connect new production areas to major demand centers. For example, the expansion of DAPL (Dakota Access Pipeline) in the US has bolstered takeaway capacity from North Dakota’s Bakken shale. Similarly, Trans Mountain Pipeline expansion in Canada will boost exports from Alberta’s oil sands. Additionally, growth in seaborne crude oil trade has also driven investments in new offshore loading terminals, ultra-large crude carriers and marine freight infrastructure. Pipeline safety and regulation pose an ongoing challenge as the network grows. Transportation of ‘heavier’ grades of crude oil also requires dedicated infrastructure.
Porter’s Analysis
Threat of new entrants: The crude transportation market requires high initial investments for setting up pipelines and tankers. Existing players have established infrastructure and transportation networks making entry difficult for new players.
Bargaining power of buyers: Major buyers in this market include large refineries and oil marketing companies. However, their bargaining power is relatively weak given the oligopolistic nature of the market dominated by few multinational companies.
Bargaining power of suppliers: A few large crude producers like OPEC nations and major oil companies control the global crude supply. This gives them significant bargaining power over buyers.
Threat of new substitutes: No viable alternatives exist for crude oil in fulfilling the large scale energy needs. However, renewable sources of energy pose a long term threat.
Competitive rivalry: The market is dominated by few major players who compete on the basis of transportation infrastructure, logistics network and competitive pricing.
Key Takeaways
The global crude transportation market is expected to witness high growth. Rapid economic development and rising demand for fuel is driving the need for adequate crude supply through efficient transportation routes globally.
Regional analysis: North America accounts for the largest share followed by Europe and Asia Pacific. USA has an extensive pipeline network for domestic crude transportation. China and India are heavily investing in new pipelines to meet their burgeoning energy demands.
Key players: Key players operating in the crude transportation market are ExxonMobil Corporation, Royal Dutch Shell, Chevron Corporation, BP plc, TotalEnergies SE, ConocoPhillips, China National Petroleum Corporation, Saudi Aramco, Rosneft Oil Company, Valero Energy Corporation, Phillips 66, Marathon Petroleum Corporation, PetroChina Company Limited, Kinder Morgan Inc., Enbridge Inc. Companies are investing in strategic partnerships and mergers to expand their logistic infrastructure.
*Note:
- Source: Coherent Market Insights, Public sources, Desk research
- We have leveraged AI tools to mine information and compile it
