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West Africa is becoming the latest oil exporting region to take advantage of the OPEC supply-cut deal and ship increased volumes of crude to the world’s highest-demand market: Asia.
According to data from traders compiled by Bloomberg, West African oil producers – led by Nigeria and Angola – are loading to ship as many as 2.19 million bpd to Asia in February - the highest level in at least five and a half years - compared with around 1.79 million bpd of oil sent in January. The February loading data could be even higher because traders Trafigura and Vitol still hold 3.74 million barrels that will probably be sent to Asia as well, traders with knowledge of the programs told Bloomberg.
China and India would be the largest buyers of the West African shipments, as refineries across Asia are trying to accommodate decreased supplies from OPEC – which along with production cuts has reduced shipments to some selected clients – with oil from other exporters.
Chinese buyers Sinochem Group, PetroChina Co. and Unipec are expected to raise their imports from West Africa by 14 percent from January to 1.3 million bpd in February, according to Bloomberg’s data.
India, for its part, is getting ready to import 692,000 bpd from West Africa, up by 39 percent.
West Africa is not the only region to have increased shipments to Asia amid reduced supplies from OPEC.
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Crude oil from the North Sea is flowing to Asia at record rates, set to reach 12 million barrels in January, Bloomberg reported last week, citing shipping data. Tankers carrying 9 million barrels are already on their way to Asian refiners and another 3 million barrels were expected to be loaded last week.
While OPEC producers are selectively cutting supplies to some customers, some exporters are not giving up the market shares that they deem particularly important. A Saudi oil ministry official said last week that Saudi Arabia would not reduce its crude oil exports to Japan despite the OPEC production cut agreement. The Kingdom supplies the largest part of Japan’s crude imports at a daily rate of 1.13 million bpd as of 2015.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.