The global oil supply chain: The essential role of non-oil product as revealed by a comparison between physical and virtual oil trade patterns

Abstract

Holistic evolution of the global oil supply chain is revealed from both physical and virtual oil use perspectives in parallel, distinctively based on inter-regional physical oil trade by oil products and virtual oil trade embodied in both oil and non-oil products during 2000–2015. Due to strengthening oil resource relocation along the complex supply chain from oil-rich regions to oil-scarce regions, time-series changes of oil use at both ends of the global supply chain present distinct profiles. Non-oil products play ever-increasing important roles in international virtual oil trade, against crude oil and oil products. Virtual oil embodied in non-oil products accounts for more than half of major oil importing economies’ total oil trade (USA: 50%, Japan: 63%, China: 58%, Korea: 61%, Spain: 82%). Global trade relations have been diversifying over time. Physical oil trade by oil products dominates the intermediate trade, whereas virtual oil trade by non-oil products leads the final trade. According to the comparative results under the two perspectives, measures to ensure global oil supply security are provided. A long-term prediction of future national virtual oil use till 2040 highlights the necessity of improving oil use efficiency economically to support society development. To tackle with the effects of non-oil products, market-oriented policies requiring concerted efforts of all the economies along the supply chain are illustrated.