ASIAN refiners are losing no time reacting to a decision by OPEC and Russia to extend their agreed production cuts to all of 2018, ordering more oil from the Caribbean and Gulf of Mexico in a move that will result in lost OPEC and Russian market share. Output cuts aimed at tightening the market to prop up prices have been in place since January and were to expire in March 2018, but the Organization of the Petroleum Exporting Countries (OPEC), together with non-OPEC producers including Russia, extended those cuts last week, to cover all of 2018. Despite this, oil supplies remain ample. Even before the official announcement to extend the cuts, refiners in Asia, the world’s biggest consumer region, had already submitted enquiries for oil shipments from the Gulf of Mexico and the wider Caribbean, particularly from the United States, Mexico, Venezuela and Colombia, tanker operators said. OPEC’s and Russia’s biggest problem with cutting output has been that it has led to higher U.S. production and market share. In a note to clients titled “Christmas comes early,” Barclays bank said Friday: “U.S. crude oil exports to China could easily double next year as U.S. production and export capacity expands ... (and) OPEC countries will see their market shares in Asia decline further.” Shipping data in Thomson Reuters Eikon shows oil shipments from the Gulf of Mexico and the Caribbean to Asia’s consumer hubs of China, Japan, South Korea and Singapore have already soared from around half a million barrels per day (bpd) in January, when the OPEC-led cuts were implemented, to over 1.2 million bpd in November and December. The biggest increase in exports to Asia has been coming from the United States, where output is soaring thanks to shale oil drillers.(SD-Agencies) |