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The fight between the US and the Middle East for a slice of the Asian oil market is heating up. with their rivalry now spilling over into refined fuels. Sellers are trying to lock in buyers for naphtha and liquefied petroleum gas – processed products that petrochemical factories use to make plastics and solvents. More than half of American LPG exports now go to Asia. according to industry consultant FGE. Meanwhile. the pressure to win customers has led state-run Saudi Aramco to cut February contract prices for the fuel by $65 a tonne. The tussle between the oil giants is intensifying after 2017 saw producers including Saudi Arabia. the world’s largest oil exporter. vie with the US to secure buyers for crude in the biggest oil-consuming region. The competition has already lowered profits for traders of American LPG to Asia. While trading margins may improve slightly. FGE forecasts it to be less than half the level reached in 2015 as the price war continues this year. Abu Dhabi National Oil Co has approached Asian buyers with an offer to negotiate three-year contracts for naphtha. a refined fuel produced from condensate or crude. according to people familiar with the matter. The agreements run longer than term deals. but prices will be set annually. At least one buyer – Malaysia’s Lotte Chemical Titan Holding Berhad – has signed on. The US isn’t slowing its sales either. Naphtha volumes from the US to Asia rose to 638.000 tonnes in December. the highest in at least four years. according to data compiled by Bloomberg. Total American LPG exports are forecast to jump 28% to 38mn tonnes in 2025 from last year. outpacing Middle Eastern shipments which will only increase 17% to about 45mn tonnes. according to consultant FGE’s 2018 report.
