• 4 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 7 minutes Countries with the most oil and where they're selling it
  • 10 minutes Stack gas analyzers
  • 13 minutes What Would Happen If the World Ran Out of Crude Oil?
  • 2 hours Trudeau Faces a New Foe as Conservatives Retake Power in Alberta
  • 4 hours Ecoside
  • 1 hour Oil at $40
  • 1 day Welcome To The Club: Apple In Talks With Potential Suppliers Of Sensors For Self-Driving Cars
  • 5 hours Not Just Nuke: Cheap Solar Panels Power Consumer Appliance Boom In North Korea
  • 2 hours Japan’s Deflation Mindset Could Be Contagious
  • 5 hours Haaretz article series _ Saudi Arabia: A Kingdom in Turmoil | Part 1 - Oil Empire
  • 1 day Guaido and the Conoco Award
  • 32 mins US Military Spend at least $81 Billion Protecting OPEC Persian Gulf Oil Shipping Lanes (16% DoD Budget)
  • 32 mins Gas Flaring
  • 10 hours The Number Increases: Swiss To Support Belt And Road Push During President's China Trip
  • 32 mins Negative Gas Prices in the Permian
  • 1 day Trump Torpedos Oil Pipeline Haters
  • 22 hours Is Canada hosed?
Alt Text

Intel Notes - April 12th

There have been a number…

Alt Text

The World’s Most Unorthodox Oil Nation

Norway has followed a quite…

Rakesh Upadhyay

Rakesh Upadhyay

Rakesh Upadhyay is a writer for US-based Divergente LLC consulting firm.

More Info

Trending Discussions

OPEC Struggling To Hold On To Asian Market Share

Two years ago, OPEC took steps to increase its market share. It continued with this same policy for two years by pumping oil in an oversupplied market. The result: oil prices tanked and OPEC increased their market share by a small margin. Today, low oil prices are crippling the finances of OPEC members, forcing them to agree to cut production to support oil prices.

But just over a month of production cuts and data shows that OPEC has lost around 5 percent market share in Asia since October.

The U.S., Brazil, Britain and Libya have increased their supply to Asia from 10.4 million barrels in October 2016 to over 35 million barrels in February of this year. This is bad news for OPEC, and may be a major hurdle in extending the production cuts beyond the stipulated six-month period.

"Under current oil market conditions, OPEC risks losing market share with further production cuts," said Carole Nakhle, director of advisory firm Crystol Energy in London, reports Reuters.

OPEC, however, is trying to retain its major customers such as China and India through a sustained supply of oil. Data shows that while China’s imports increased 27.5 percent year-on-year in January, Saudi Arabia’s supply to the Asian powerhouse rose by 18.9 percent. Related: Cooking The Books? Saudi Aramco Could Be Overvalued By 500%

Between December 2016 and January of this year, Saudi Arabia’s exports to China increased a whopping 40 percent. Though it is likely that the increased supplies would have come from floating storage, it shows that the oil rich kingdom is making all-out efforts to keep the customers well supplied.

The Saudi Arabian King Salman bin Abdul-Aziz al-Saud’s ongoing official visits to the major importing nations of China and Japan - among others - can be seen as an attempt to keep its major customers placated.

Nevertheless, in an oversupplied market, the customers are likely to try other suppliers on for size, especially when the landing price of oil is not very high. The suppliers, on the other hand, are widening their customer base, taking advantage of OPEC’s production cuts, low freight charges, and arbitrage opportunities to reach out to new markets.

"The OPEC cuts have ... led to an open arb for long-haul cargoes, leading to a rise in long-haul crude imports (which) make up for the decline in OPEC (supplies)," said Tushar Bansal, director of Ivy Global Energy, a Singapore-based consultancy, reports Reuters. Related: Is Mexico’s Oil Boom Under Threat?

Due to new competitors, Saudi Arabia has not been able to raise the official selling price of its Saudi light crude oil to Asia. The current Saudi light crude OSP to Asia is at a 15-cent-per barrel premium to Dubai crude, which shows that the oil-rich kingdom hasn’t regained its pricing power.

"The OSP to Asia in the 2010-2014 time period averaged $1.65 over Dubai. In the time since the world price collapse back in mid-2014, that OSP has averaged a discount of 34 cents to Dubai," said RBC strategist Michael Tran in a note.

"Right now, we're slightly north of flat. I would think that while there's no magic number...I would look at more of a trend. If you see several months where you see a material uptick, that would suggest that the market is certainly tightening. If we saw a 30 cent hike two or three months in a row, I think that would be quite significant," Tran added, reports The Street.

By Rakesh Upadhyay for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News