Publications: Notes at the Margin

The End of the Asian Premium (July 29, 2024)

 

Asia was once the guaranteed market for Middle Eastern crude oil, essentially serving as a piggybank for producers like Saudi Arabia. The Asian buyers were stuck because high transportation costs prevented suppliers such as Russia, African exporting nations, and the North Sea from competing.

 

The situation has changed. The competition for Asian buyers has become intense due to the diversion of Russian oil to the area, efforts to break the Middle East monopoly, the rise in US exports, the completion of Canada’s Trans Mountain Expansion, and the declining petroleum demand in China and California. The breakdown of the Middle East’s dominance could destabilize the global market.

 

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