Saudi Arabia Maintains Share of Japan`s Oil Imports

Saudi Arabia accounted for 40% of Japan`s crude oil imports in the first half of 2017. unchanged from the share it enjoyed before OPEC agreed to cut oil production.
One of the world`s top oil-producing countries. the OPEC leader seems intent on retaining its share of business with Japan. setting a low price for crude`s relatively expensive light grade in an effort to ensure this.
Japan imported 36.97 million kiloliters of crude oil from Saudi Arabia in the January-June half. according to statistics released Monday by the Agency for Natural Resources and Energy. This represents a 6% increase from the first half of 2016 and gives Saudi Arabia an average share of 40% of imports during the period. That is a higher share than during the first half of 2016. and unchanged from its share in December. before OPEC and the main non-OPEC producing nations agreed to curtail oil output.
Saudi Arabia inks long-term contracts for oil exports but adjusts the pricing to reflect the monthly average price of benchmark crude. The new trend in the oil markets of Asia is to discount the price of light crude. which is used to make gasoline and light diesel oil.
Given the lower price. Japanese imports of extra-light crude ballooned by 40% in January-June. The adjusted price differential between the lightest and heaviest grades of crude shrank to $5.85 per barrel in June. down from $7.25 in December.Saudi Arabia took the lead in efforts to bring down oil production. reducing average output to some 9.92 million barrels a day during April-June. or 6% less than in October.
As one trader explained. the kingdom is reducing overall production but working to sell more light crude. which commands a higher price than heavier varieties.
Saudi Arabia uses Dubai crude as the benchmark for its pricing. Dubai crude is a heavy grade that contains more sulfur than West Texas Intermediate — the U.S. benchmark — so it typically trades for less. However. the increase in U.S. shale oil production has kept a lid on the price of WTI and the two benchmarks have traded places since the end of last year.
Many think that Saudi Arabia is setting a low price for light crude in order to maintain its price competitiveness.
However. trouble could arise if heavy crude continues to appear overvalued. `This might cause supplies to tighten for heavy fuel oil [made from heavy crude] and send prices higher.` noted Takayuki Nogami. chief economist at Japan Oil. Gas and Metals National Corp.

About core

Check Also

Iraq’s Financial Revenues Surpass 65 Trillion Dinars, Oil Dominates at 95%

The Ministry of Finance revealed on Sunday that Iraq’s financial revenues in the federal budget …

Leave a Reply

Your email address will not be published. Required fields are marked *