Tuesday, December 2, 2014
U.S. oil shipments to Asia founder as Middle East producers flood market
Middle East OPEC producers are exploiting the lowest oil prices in five years to defend their market share against the U.S. shale oil boom, as U.S. oil shipments to Asia grind to halt.
Asian refineries have stopped imports of U.S. condensate only four months after they started, reportedly favoring cheaper Middle East grades, according to trade and industry sources.
The issue demonstrates the fierce competition that has arisen between suppliers after oil prices dropped more than 40 percent since June.
Last week Ali al-Naimi, the oil minister of OPEC Saudi Arabia, told fellow OPEC members they had to fight the U.S. shale boom. He argued against cutting OPEC production in order to keep prices low and undermine the profitability of North American shale oil, which is costly to produce.
"There's so much oversupply that Middle East crudes are now trading at discounts and it is not economical to bring over crudes from the U.S. anymore," said Tushar Tarun Bansal of consultancy FGE in Singapore.
U.S. oil became uncompetitive against like grades from Qatar, Saudi Arabia and the UAE after Gulf producers began dropping prices in August.
For more of the Reuters story: reuters.com
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