The early signs are that Middle East suppliers will prioritize Asia, pushing competitors in Africa and the Americas to keep cargoes in the Atlantic region. Saudi Arabia has indicated it will initially maintain most flows to fast-growing Asia, while draining more heavily oversupplied Western regions. Kuwait is doing much the same.

They want to keep their market share to Asia,†Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland, said of Middle East suppliers. The routes they will restrict the oil flow most will be to the U.S. and Europe.â€

Understanding how and where oil flows matters to almost everyone in the supply chain. Crude traders need to know as they exploit regional price gaps, tanker owners depend on the cargoes being transported over long distances, while many refineries are configured to run most effectively using specific varieties of crude.

Prioritizing Asia

If Middle East producers do indeed fight to keep their Asian market share, then higher proportion of crude pumped in West Africa, the North Sea, the Black Sea and the Mediterranean could stay within that region, according to Erik Nikolai Stavseth, a shipping analyst at Arctic Securities AS in Oslo.

The Saudis' prioritizing growing Asian nations and leaving Western buyers more to themselves is an obvious negative for crude tankers,†since it would imply shorter-distance shipping and fewer cargoes, said Stavseth. Supertankers are already bracing for their worst year since 2013.

Still, there are many moving parts that dictate where barrels flow. Demand for tankers would take a hit if fewer cargoes were moved between from the Atlantic to Asia, a long-distance route. Cheaper shipping could then make such deliveries financially attractive. If one region gets a bigger cut than another, prices adjust, pulling cargoes from one area to another. Much will also depend on the grades the producers cut.

Right grades

Much of the Middle East's reductions will be heavy grades that are cheaper, says Eugene Lindell, a senior analyst at Vienna-based JBC Energy GmbH. If correct, then Venezuela and other Latin American suppliers could make up the shortfall, he said. By contrast, Sadad al-Husseini, an independent Dhahran-based analyst and former official at Saudi Arabia's oil company, said he expects the bulk of Saudi cuts to be Arab Light because demand for Heavy is high.

Through the first nine months of this year, Saudi Arabia shipped ...