Big powers in race for oil

The world’s big powers are in growing competition to buy oil from top exporters and develop projects in energy-producing states, eager to secure supplies to propel economic growth.

China has agreed to boost oil imports from Saudi Arabia by over a third next year, trade sources said this week. The deal comes days after confirmation that China will also boost imports from Iran by a third. The competition stems from rapidly rising fuel needs outside the US. That demand is likely to keep a strain on supply that this year helped send oil prices to a record high near $100 a barrel.
“Emerging markets are scrambling to get more oil because their economies are growing very fast,” said Francisco Blanch, head of commodity research at Merrill Lynch, adding “There’s very little chance of supplying China with an extra half a million barrels per day each year for the next 10 years, without somebody else taking a hit.” Oil demand in China, the world’s second-largest consumer, is set to rise by 5.7% next year to 7.9 million barrels per day, according to the International Energy Agency.

Consumption in India — which is also looking for higher crude supply from Iran and Saudi Arabia, according to an official at Indian refiner Bharat Petroleum — is expected to expand by 2.9%. By contrast, demand in top consumer the US is forecast to increase by only 0.9% and consumption in Europe to grow by 1.4%.

Saudi Arabia, the world’s top exporter and a US ally, has made clear it is counting on demand from Asian economies to justify the billions of dollars it is spending to increase output capacity.

Economic Times