The Oil Drum: The Chinese don’t think oil is fungible

This only works when there is more oil available than there is a need for. And until we see more demand destruction than we have so far one must conclude that this historical situation is coming to an end. As depletion continues to carve away at the oil available from existing fields, and as new development fails to match both this depletion and the growth in demand, then oil will stop being fungible.
At that point China may well get what it needs, only if it has the rights to the oil through the companies that it controls. And that may become an issue. Countries such as Indonesia are already having problems because “their” oil is leaving, and they can’t afford to buy it back. This may lead to different national policies. After all, in the past, a number of countries took over the oil from foreign operators, and there is nothing to say that existing arrangements cannot be changed, by state fiat in many cases.

More fungibility of oil talk after the jump at The Oil Drum.