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Page added on September 19, 2015
Saudis Winning Oil Market Share Wars Despite Fiscal Pain
Saudi Arabia appears to be winning the oil exporters tussle for market share, even if it is denting the country’s coffers. Anecdotal and empirical evidence doing the industry rounds was backed up by US Energy Information Administration’s recent research pointing to the OPEC heavyweight maintaining its crude oil market share among Asian customers, where much of the recent growth in liquid fuels demand has occurred.
In the first half of 2015, the Saudis exported on average 4.4 million barrels per day (bpd) of crude oil to seven major trading partners in Asia – China, Japan, India, South Korea, Taiwan, Thailand, and Singapore. Of these, the country’s market share only declined in Singapore but regional powerhouses China, Japan and India continued to import at broadly similar levels.
From January to June 2015, total crude oil imports reported for seven Asian countries averaged 19.1 million bpd, about 700,000 bpd higher than during the same period in 2014. The share of these crude oil imports from Saudi Arabia averaged 23.2% from January to June, compared to 23.9% in the same period in 2014.
Putting things into context, exports to Asia make up more than half of Saudi Arabia’s total overseas oil dispatches, and for much of 2014 and 2015, it has focused on maintaining market share rather than lending support to the oil price by lowering production. Additionally, US imports of Saudi medium and medium light crude oil rose 275,000 bpd over the second quarter of 2015, even though US importation from OPEC as a whole was down on lower takings of Iraqi oil (see below).
While the Saudi stance has dented prospects of high cost exploration and production, it too is taking a hit. The country’s Finance Minister Ibrahim al-Assaf recently told CNBC Arabia the government would “cut spending and delay some state projects” after the recent oil price decline.
20 Comments on "Saudis Winning Oil Market Share Wars Despite Fiscal Pain"
Truth Has A Liberal Bias on Sat, 19th Sep 2015 6:44 pm
First!
Makati1 on Sat, 19th Sep 2015 8:26 pm
Food for thought:
http://journal-neo.org/2015/09/16/opec-russia-and-the-emerging-new-world-order-emerging/
“Now what is very likely to emerge in the current extraordinary situation is a negotiated arrangement between Putin’s Russia and the Saudi-led OPEC oil producers of the Middle East, including Iran, to devise a new ordering of world energy supply, one independent of the near century of Anglo-American domination. The benefits of such a new world ordering are simply too great for all involved parties to ignore. … In such an accord with Russia, the oil producing countries of the Middle East would join as central parties to the unfolding economic boom that is emerging out of the China One Belt, One Road new Economic Silk Road rail and sea port infrastructure project.”
And the beat goes on…
rockman on Sat, 19th Sep 2015 10:38 pm
And again this foolishness about market share. It isn’t that market share isn’t a criyical factor to any seller but do these writers understsnd why? Does everyond here know? It to generate the max cash flow to a seller. And is that’s what has happened to the KSA? F*ck no. A thousands times f*ck no. LOL.
Do folks think the rulers in the KSA are on some ego trip looking to brag about theirbin rease in market while lower oil prices will result in their seeing hundreds of $billions in lost revenue in the near term. Again there is only one goal of increasing market share: increasing revenue. And since lower oil prices have increased market share but also lost revenue for the KSA it’s rediculous to claim this was an intention plan by the Saudis. Even those they are selling a larger volume of the FINITE OIL RESERVES their income has still decreased.
And for Dog’s sake stopping pointing to a goal of hurting US shale producers. When/if oil prices increase to a significant level those plays will kick in again. And probably even faster then the original boom since we’ve come much further down the learning curve. After all it was only just a few years after oil prices sank to prices lower then we have today that the shale boom begain. The oil patch was rather busted before the shale boom
buy had no trouble kicking into high gear once ool prices got high enough. Let oil get back to the high range again and the capex will return.
bu
Plantagenet on Sun, 20th Sep 2015 12:03 am
The Saudis are Sunni. Iran is Shia. The last thing Sunni KSA wants is to lose market share to the Shia Iranians.
Makati1 on Sun, 20th Sep 2015 8:48 am
rockman, I suggest that there will be no financial system to support restarting the fraking delusion. After the crash, the Us consumers will be 3rd world. At least half the cars will be off the road, permanently. There will be no demand at any price beyond a much contracted government and military.
The buying power of the average American has been contracting for decades. It has hit the wall of maximum debt that the whole system was built on. Zero interest for years has not been able to restart it. The Age of “any kind” of Petroleum is fast ending. And not a bit too soon.
MidnightCommentator on Sun, 20th Sep 2015 9:18 am
Shale/Fracking represents about 5 to 10 % of USA GDP whereas KSA’s petroleum industry generates about 90 % of its GDP. Aren’t we comparing apples and oranges here? Oil prices go up, fracking turns on the spigots again but this time much more efficiently…
Boat on Sun, 20th Sep 2015 9:38 am
Plant,
17% sunni in Iraq, 17% Kurd, 65% Shia
Boat on Sun, 20th Sep 2015 9:47 am
Mak,
Your nuts but at least constant lol. What crash. The one BC claimed would happen in 4 1/2 months?
Even during the depression the employed worked at a 75% rate. Was that the big crash?
Ted Wilson on Sun, 20th Sep 2015 10:02 am
For OPEC, Russia, Norway & Mexico, the primary goal is to kick shale producers out of business.
If the US shale production can increase from 1 million b/d to 5 million b/d in the last 5 years, then it can increase to 10 or 15 million b/d in the next 5 years and this is a nightmare for the exporters.
So they will go to any extent to reduce the price and increase the supply.
Ted Wilson on Sun, 20th Sep 2015 10:07 am
The next plan of Saudis and other exporters is to cut the crude exports and export the finished products like gasoline, diesel, kerosene which fetches better margins.
They can even take over few retail chains in US / EU and start selling their products thru them.
After all, no one expected Saudi’s to reduce the price suddenly.
Boat on Sun, 20th Sep 2015 10:35 am
Ted,
The Saudis own Motiva which is a group of three refineries on the gulf coast. One of those was the worlds largest finished petroleum product refineries a few years ago.
joe on Sun, 20th Sep 2015 11:31 am
As everyone keeps saying the soon to be over glut is not going to help the economy or the Saudis. We are reaching a high point in our civilisation, the next phase will be drawn out in long conversations about climate change, use of AI in the middle class job roles and the use of transportation by humans responsibly.
Some people believe that the economy will end in its current form soon. That should be understood as a foundation of economics. The real question is how will developments be to the advantage of those people living in those times. Most politicians don’t see much beyond their grandkids lives, at best. The US is so heavily subsidised by the petrodollar and it’s been that way for so long, most people can’t see how cheap oil benefits them.
Cheap oil is encouraging the buying of dollars by hoarders like China, but with zero interest rates the debt it’s selling now will be worth more since they would have a higher rate since it was bought long ago, therefore they get more dollars that the US is happy to issue to keep its own QE splurge going (because oil is sold in dollars). The myopic ‘FREE’ market cant see that higher rates (which they think is a sign of economic health) will cause China to stop selling debt to buy more debt, that will pressure the US to raise rates again to encourage debt buying, but also shoot the US consumer in the foot, it would stop Chinese hoarding and crash the price of oil, forcing OPEC to cut and driving up oil prices.
So the merry-go-round will go on the bumpy plateau.
joe on Sun, 20th Sep 2015 11:37 am
I think we are clearly beginning to see the abject failure of the green revolution mixed with greed and globalisation, the forth horseman of this apocalypse will be the political instability it will bring to the world. Big Pharma brought us the green revolution, big money brought us globalisation, we all bring big greed, and fear will do the rest.
rockman on Sun, 20th Sep 2015 12:19 pm
Mak – The capex for any future US shale boom will come from the same source as the previous boom: the sheeple investor pool. It was there in 1979, the early 90’s, 2006-07 and again in 2009. After each bust the investors came back when the oil price did.
As far as future US shale production potentially reaching 10 to 15 million bopd exactly how the f*ck would that happen if oil prices weren’t $90+/bbl? And we know the KSA et al wouldn’t cut production so the other producers could maintain their revenue stream…they ain’t doing it today.
So in a world where the US shale producers increase market share but the KSA et al are still selling the same volume and receiving all time record revenue: why would any oil producer screw with such a set up?
Folks make such simplistic statements about A or B happening without considering the effect on the entire system. Today the KSA is more quickly depleting it FINITE OIL RESERVES and collecting much less revenue when they were producing less. And folks somehow think this is an intentional plan by the Saudis??? The KSA wants to lose tens of $BILLIONS of revenue as a result of lower oil prices??? And some think that the US shales wouldn’t have $billions of capex thrown at it again if oil prices recover to former levels??? And they also believe the KSA has the same belief???
There were companies/investors ready to throw $billions more at shale prospects before oil prices collapsed. Many of those prospects aren’t being drilled today but they’ll still exist in the future. The only difference in a future shale boom is that the learning curve has been well established and thus the future boom will develop faster then the last.
And it will make no difference if the vast majority of the shale players have gone belly up. Most of those companies were insignificant operators before the shale boom began. An entire new generation of shale players will rise from the ashes once oil prices recover and the investors come rushing in. Just as happened with the first shale boom when the oil patch rose from the ashes after oil fell to $17/bbl and investors ran from the industry like scalded dogs.
This cycle has been well established for well over 100 years. There’s no reason to expect the dynamics to change now. In fact PO actually guarantees it IMHO.
Makati1 on Sun, 20th Sep 2015 9:00 pm
rockman, what makes you think there will be any sheeple ‘investors’ left? Or that they will fall for the same BS as before. I don’t see that happening. I see a 3rd world America when the dust settles and nothing better. But then, I am not influenced by a lifetime career in the oil industry, just reality.
Don’t you realize that Americans can live nicely on about 1/10 of the oil energy they burn today? The Ps lives nicely on less than that 10%.
That 100 years of ‘looking back’ is no longer valid. Today is nothing like last century and tomorrow will be even more different in a very difficult way.
I don’t expect to change your mind. It appears to be too ingrained with the past to see the future clearly. So be it. We can agree to disagree.
I personally hope that fraking dies today and never arises again. Ditto for all of the other desperate attempts to kill our planet by the corporate elte.
Kenz300 on Sun, 20th Sep 2015 9:17 pm
Banks have stopped lending to shale producers…..
The decline in shale production has begun……
Wind and solar are growing is use every day.
Global Renewable Energy Roundup: China, Kenya, Turkey, India Seeking More Renewables – Renewable Energy World
http://www.renewableenergyworld.com/articles/2015/08/global-renewable-energy-roundup-china-kenya-turkey-india-seeking-more-renewables.html
Nony on Mon, 21st Sep 2015 1:18 am
1. There’s no fight for market share. Saudis are just selling into a competitive market. US LTO (and other high cost sources) are being pushed out because of low prices. Econ effing 101.
2. The investment made sense at $100. It doesn’t at $50. That doesn’t mean anything about sheople or dumb investors. If anyone is so super smart and better than the sheople why didn’t he short the oilcos last summer?
GregT on Mon, 21st Sep 2015 6:06 am
“Econ effing 101.”
Everyone repeat after Nony; The market will provide, long live the market. Growth, growth, growth!
Davy on Mon, 21st Sep 2015 7:01 am
NOoo said “That doesn’t mean anything about sheople or dumb investors.”
It does point to snake oil and fleecing by greed driven psychopaths and legalized criminal activity.
Kenz300 on Wed, 23rd Sep 2015 8:13 am
KSA needs to diversify its economy……. while it can…
Diversify…diversify…diversify…..