OPEC’s rivals sending oil to Asia because of difference in prices

OPEC’s rivals find it more profitable to go roundabout than straightway. 25.Nov.16 3:33 AM By Anna Tuzova Photo Toinnov.com    200

While OPEC’s members try to negotiate a oil output cut, the glut of the oil supply has lead to a situation when selling oil in Asia is more profitable for OPEC’s rivals. The North Sea oil will reach Korea in the nearest future, tankers carrying shale oil from Eagle Ford in the USA and Mexican oil have reached Yeosu port in November. Japanese and Thai oil refining companies buy West Texas Intermediate from BP Plc. Oil supply to Asia from more distant regions than the Middle East is becoming more profitable because of the contango – the market situation where near-term supplies are cheaper than those long terms. The sellers have interest in the situation as the price of the oil increase while a tanker is headed for a destination point. For buyers, abundant output means that the South American and European oil becomes cheaper than OPEC’s raw oil. According to the Energy Aspects Ltd. analyst Nevin Nah, “The wider contango has given OPEC’s rivals a shot at loading up a vessel and sending oil from all corners of the globe to Asia, even if it sails for up to two months”. OPEC’s fight for a market share while member countries, including Nigeria and Libya, resume increasing of oil output and the build-up of an oil output in Russia have strengthened the glut.

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