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High Saudi Oil Prices Seen Drawing Crude East

High Saudi Oil Prices Seen Drawing Crude East
dj
Τρι, 6 Δεκεμβρίου 2011 - 18:48
A steep hike in oil prices for Asian buyers of Saudi Arabian crude in January could prompt more oil to flow east from the West African market and Atlantic Basin, analysts said Tuesday.
A steep hike in oil prices for Asian buyers of Saudi Arabian crude in January could prompt more oil to flow east from the West African market and Atlantic Basin , analysts said Tuesday.

Prices of crude from the world's largest oil exporter are set to increase for most customers in January, according to official selling prices published Monday by state-owned Saudi Arabian Oil Co. (SOI.YY), which is known as Saudi Aramco.

But Asian buyers in particular are to be hit by higher prices, with the Kingdom setting Arab light, medium and heavy crudes at record high levels for the Asian market.

Market participants said that the steep hike could encourage Asian refiners to turn to other sources of crude, particularly if other Middle Eastern producers also raise their prices.

"We may see Asian buyers turning en masse to Atlantic Basin and West African crudes in the coming period," said JBC Energy in a note.

Traders in the West African market said it was possible that Asian buyers would start to buy more crude from countries such as Nigeria , which don't traditionally sell a lot of oil to the eastern market.

"If differentials get low enough, I'm sure it could happen," said one trader active in the market.

Already signs have emerged that there is room for oil to travel unusual routes thanks to the high prices in Asia versus Europe .

Last week, BP PLC (BP) surprised the market by booking a supertanker to take 2 million barrels of North Sea Forties crude to South Korea , a trading route that is rarely used.

"Demand from Asia is better in general for oil than in Europe ...the news BP took North Sea crude to South Korea is an example of that arbitrage," said James Zhang, strategist at Standard Bank.

He added that if prices in Europe remained relatively cheap, it could open the way for other crudes to travel to other regions.
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