Oil refiners in Asia have reacted to OPEC and Russia’s decision to extend production cuts by placing orders with regions in North America that are not effected by last week’s decision.
This is the first sign that the output curb designed to tighten levels of reserves and maintain an oil price above $60 has led to a loss in market share for the countries that signed up to the agreement.
The world’s largest oil consuming region had, however already enquired into oil shipments from the Caribbean and the Gulf of Mexico – particularly from the US, Mexico and Colombia – prior to the OPEC announcement on Thursday.
Shipping data from Thomson Reuters Eikon shows that since January, when the cuts were first enforced, shipments from North America had soared from approximately half a million barrels per day (bpd) to over 1.2 bpd in November and December.
The largest increase in exports to Asia is from the US, where output has been boosted by an increase in shale oil drillers. This comes following China’s decision to use US reserves to diversify its import suppliers, that led it to become the largest purchaser of crude from the US.
In a note to clients on Friday, Barclays bank said: “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.”