Asia Attracting All Producers
(MENAFN- Arab Times) The recent Russian push to capture the China market is another indication of the way the oil market has changed directions. This stable market of the Arabian Gulf oil producers is quickly becoming the center of attraction for all other oil producers. With the arrival of shale oil, North African producers are turning away from America and looking towards Asia particularly China, India, Korea, Japan and Indonesia.
Indeed, Asia is attracting the attention of all oil producers. Russia has suddenly jumped to the top position of the highest oil supplier to China, followed by Angola and Saudi Arabia. With Russia's crude oil volume reaching above 930,000 barrels per day and Saudi Arabia 700,000 barrels, the competition is severe and is bound to worsen with the entry of Iranian crude oil into the market after the sanctions against it are lifted.
The new oil policy of Russia is to push for barter or loan deals or make payments using goods instead of US dollars. The same is applied with Iraqi and Iranian sales until further notice, as those countries with their huge populations are in need of food, goods and machineries. Today, Russia, being the largest crude oil producer with over 10.7 million barrels per day, needs to find new markets due to its fall in Europe and lack of demand for its increasing oil volume. Moreover, US shale oil could find its way to Europe within a few years with domestic surplus reaching its maximum ullage.
The advantage of barter deals is that the final price of any goods will not be known and will continue to be subjected to speculations at any time, which works to the advantage of the buyer. Consequently, no one will know the actual price of oil and the seller is quite satisfied about the fact that he secured a longterm buyer. Oil producers with small populations such as the Gulf countries cannot do barter deals and have to be transparent about their final crude oil price. There is nothing they can do about it. They could become the last supplier or could offer their customers mixed crude oil that other suppliers cannot offer.
Perhaps, they could invest in building new refineries in the consumer countries to make them their buyers permanently or for as long as possible. The fight in finding new outlets and increasing the market share is the game that oil producing countries are currently involved in; so every participant has its own marketing game plan - either by bartering, discounting or investing. The coming months will certainly witness a new era with more oil coming into the market from almost everywhere. This is definitely good news for the buyers and such a situation will continue for some time.
Indeed, Asia is attracting the attention of all oil producers. Russia has suddenly jumped to the top position of the highest oil supplier to China, followed by Angola and Saudi Arabia. With Russia's crude oil volume reaching above 930,000 barrels per day and Saudi Arabia 700,000 barrels, the competition is severe and is bound to worsen with the entry of Iranian crude oil into the market after the sanctions against it are lifted.
The new oil policy of Russia is to push for barter or loan deals or make payments using goods instead of US dollars. The same is applied with Iraqi and Iranian sales until further notice, as those countries with their huge populations are in need of food, goods and machineries. Today, Russia, being the largest crude oil producer with over 10.7 million barrels per day, needs to find new markets due to its fall in Europe and lack of demand for its increasing oil volume. Moreover, US shale oil could find its way to Europe within a few years with domestic surplus reaching its maximum ullage.
The advantage of barter deals is that the final price of any goods will not be known and will continue to be subjected to speculations at any time, which works to the advantage of the buyer. Consequently, no one will know the actual price of oil and the seller is quite satisfied about the fact that he secured a longterm buyer. Oil producers with small populations such as the Gulf countries cannot do barter deals and have to be transparent about their final crude oil price. There is nothing they can do about it. They could become the last supplier or could offer their customers mixed crude oil that other suppliers cannot offer.
Perhaps, they could invest in building new refineries in the consumer countries to make them their buyers permanently or for as long as possible. The fight in finding new outlets and increasing the market share is the game that oil producing countries are currently involved in; so every participant has its own marketing game plan - either by bartering, discounting or investing. The coming months will certainly witness a new era with more oil coming into the market from almost everywhere. This is definitely good news for the buyers and such a situation will continue for some time.
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