Brazil’s crude oil exports to Asia increased during the first half of the year as most of the country’s competitors for the Asian market cut production to match the slump in oil demand driven by the coronavirus outbreak.
Reuters reports that Brazilian oil exports to Asia averaged 1.07 million bpd during the first half of the year, up 30 percent on the year. June marked a record, when average daily deliveries hit 1.62 million bpd.
There were reports late last year that Brazil could join OPEC, but in January, energy minister Bento Albuquerque said the country had decided to stay out of the cartel as it planned to boost production.
“The idea is just to increase our production and to participate more in the international oil and gas market,” Albuquerque told Bloomberg in an interview. “But this is not a plan for Brazil to join OPEC or any other association or group of oil and gas producers. We don’t want restrictions, we want to increase our production.”
If Brazil had agreed to become a member of OPEC it would have been obliged to cut production to compensate for the slump in oil demand caused by the combination of an oil price war and the coronavirus pandemic. In hindsight, the government’s decision was even smarter than it looked at the beginning.
Some 70 percent of Brazil’s crude oil exports arrive at Chinese ports, Reuters reported, citing a statement by Petrobras. According to traders who spoke to the news agency, Brazil had good quality oil available when Asian economies began to reopen after the lockdowns, while Europe and North American were just beginning their lockdowns.
In addition to an attractive price, Asian buyers liked Brazilian crude oil because of its low sulphur content: low-sulphur oil has been in great demand since the International Maritime Organisation effected its new emission rules for maritime fuel at the start of this year.
Editor’s note: Find pricing data on Brazil’s no.1 export blend ‘Lula’ and other major crude blends on our oil prices page.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
- Second Wave Of COVID-19 Won’t Crush Oil Prices
- Bullish News Fails To Spark Rally In Oil Prices
- Five Value Stocks In Natural Gas