Saudi Arabia is starting to focus more on Asian destinations for its crude, which may result in lower costs to the region, writes Clyde Russell in a Reuters analysis.
“The Saudis aren’t exactly retreating from the North American and European markets, but they seem to have read in the tea leaves the trend that physical oil flows are moving toward the East and away from the West. This pivot from North America can be seen in the OSPs this year for the various regions, with prices rising for cargoes to the United States and dropping for Asia,” Russell writes.
Writing in the Financial Times, Ed Crooks and Anjli Raval reveal the surge in American production may soon outpace traditional heavyweight producers. “US crude oil production in August was still lower than either Saudi Arabia’s, at about 9.7m b/d, or Russia’s at 10.1m b/d. The overall US leadership in petroleum is accounted for by its higher production of natural gas liquids such as ethane and propane, which have a lower energy content and are often used as feedstocks for the petrochemical industry rather than for fuel. Still, on current trends the US could catch up with Saudi Arabia and Russia on crude production alone by the end of the decade.”
Demand for energy is still healthy in the United States, but increased domestic production here is outpacing that, amounting to a near-historic increase, according to BP.
“Indeed, the U.S. increase in 2013 was one of the biggest oil production increases the world has ever seen,” said BP Group Chief Executive Bob Dudley.
