As OPEC price hike looms, Asia's big oil buyers may shop elsewhere
For the first time since 2008, OPEC is set to strike a deal to cut oil output that may boost prices. It may also give itself a bloody nose in Asia, where big buyers are ramping up supplies from elsewhere and say they don't want to pay more for fuel.
The Organization of Petroleum Exporting Countries (OPEC) meets today to hammer out a deal to prop up prices that have halved since 2014. As they gather, tanker shipments to Asia from non-OPEC sources like Alaska, Azerbaijan, and the North Sea are growing, according to shipping data in Thomson Reuters Eikon.
Buyers in Asia, which alone uses a third of the world's oil supply, have watched with concern as OPEC suppliers - their biggest - openly discuss propping up prices. With non-OPEC supplies readily available, they say they'll consider exploring new sources if the cartel's price is no longer right.
"For us, the current price levels look to be appropriate for both sides (buyers and producers)," said Eiichiro Kitahara, Executive Officer at major Japanese refinery TonenGeneral Sekiyu. "Our company aims to avoid depending highly on certain suppliers, and we may seek new (supply) opportunities," Kitahara said, though like other executives he cautioned against expectations of any sudden change in supply trends among buyers.
Major importers in Japan, China and South Korea have long-standing relationships with OPEC suppliers, with just its Middle East members providing two-thirds of Asia's oil needs. Those ties could loosen, with refiners in countries like Japan - which gets around 90 percent of its oil from Middle East OPEC-members - keen to diversify sources to cut reliance on any single supplier.
In China, now challenging the United States as the world's biggest oil importer, efforts to reduce dependence on Middle East supplies have already seen OPEC kingpin Saudi Arabia lose its no.1 supplier rank to its rival Russia. Eikon data shows Middle East producers' share of China's supply market fell from 50 percent in January to 46 percent in November.
PRICE - THE BOTTOM LINE
Oil markets remained jittery ahead of the OPEC meeting. But refiners across Asia remain alive to the prospects of shifting market dynamics and how they could make other suppliers more attractive, even as OPEC seeks a price rise to boost the economies of countries that rely heavily on crude exports.
"We are closely monitoring the OPEC meeting," said Kim Woo-Kyung, a spokeswoman at major South Korean refiner SK Innovation. "Even if OPEC cuts output, it won't have a big impact (on SK Innovation business) as there are a lot of supplies out there."
The Organization of Petroleum Exporting Countries (OPEC) meets today to hammer out a deal to prop up prices that have halved since 2014. As they gather, tanker shipments to Asia from non-OPEC sources like Alaska, Azerbaijan, and the North Sea are growing, according to shipping data in Thomson Reuters Eikon.
Buyers in Asia, which alone uses a third of the world's oil supply, have watched with concern as OPEC suppliers - their biggest - openly discuss propping up prices. With non-OPEC supplies readily available, they say they'll consider exploring new sources if the cartel's price is no longer right.
"For us, the current price levels look to be appropriate for both sides (buyers and producers)," said Eiichiro Kitahara, Executive Officer at major Japanese refinery TonenGeneral Sekiyu. "Our company aims to avoid depending highly on certain suppliers, and we may seek new (supply) opportunities," Kitahara said, though like other executives he cautioned against expectations of any sudden change in supply trends among buyers.
Major importers in Japan, China and South Korea have long-standing relationships with OPEC suppliers, with just its Middle East members providing two-thirds of Asia's oil needs. Those ties could loosen, with refiners in countries like Japan - which gets around 90 percent of its oil from Middle East OPEC-members - keen to diversify sources to cut reliance on any single supplier.
In China, now challenging the United States as the world's biggest oil importer, efforts to reduce dependence on Middle East supplies have already seen OPEC kingpin Saudi Arabia lose its no.1 supplier rank to its rival Russia. Eikon data shows Middle East producers' share of China's supply market fell from 50 percent in January to 46 percent in November.
PRICE - THE BOTTOM LINE
Oil markets remained jittery ahead of the OPEC meeting. But refiners across Asia remain alive to the prospects of shifting market dynamics and how they could make other suppliers more attractive, even as OPEC seeks a price rise to boost the economies of countries that rely heavily on crude exports.
"We are closely monitoring the OPEC meeting," said Kim Woo-Kyung, a spokeswoman at major South Korean refiner SK Innovation. "Even if OPEC cuts output, it won't have a big impact (on SK Innovation business) as there are a lot of supplies out there."
Last Update: November 29, 2016 22:05