The evolution of oil trade: A complex network approach

Trade in oil has undergone significant changes in the last 20 years: technical progress has allowed the exploitation of new and previously untapped fields; the emergence of new large oil importers, such as China, has shifted the traditional patterns of demand and supply, while the desire to diversify energy sources has favored the emergence of new suppliers. This paper compares the topological properties of the network of crude oil trade over the period 1995–2014. The analysis covers both aggregate measures (such as network density and centralization) and node-specific indicators (e.g. centrality) that allow to uncover the rise (demise) of new (old) important players. Accounting for the position of each country within the network provides valuable information above and beyond traditional measures such as market shares. To investigate whether oil trade has experienced a process of globalization or, rather, regionalization, we look at the community structure of the network: the number of communities increases in the aftermath of the global financial crisis, but then goes back to its historical values. Something similar happens to the average geographic distance within each community, showing that along a regional component there are also strategic/political considerations at play. Econometric analysis suggests that high oil prices increase the likelihood that high-production-cost exporters play a more central role in the network, thus reducing the power of traditional suppliers.