Saudis quit Caribbean oil storage; China steps in

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NEW YORK/HOUSTON/BEIJING (Reuters) – Saudi Arabia will quit a long-held lease for 5 million barrels of Caribbean oil storage near the key U.S. market on Thursday and state giant PetroChina is poised to move in, industry sources said, a potential major shift in global oil trade dynamics.

Coming just weeks after Saudi Oil Minister Ali al-Naimi revealed the world’s top oil exporter accepted an offer for free storage in Japan, the news underscored the growing importance of China and Asia versus the United States, where the government says oil demand has already peaked and supply competition from nearby Brazil and Canada is expanding.

It also highlights the increasingly global reach of China’s biggest state oil company, which could use the facilities as a staging point for a growing slate of South American oil deals or as trading leverage in the U.S. market, which still effectively sets the global price of oil.

While analysts said the commercial rationale was the motivating factor, the move also has potential geopolitical implications, relocating one of Saudi Arabia’s small but important tools for providing energy security to top markets.

Reuters