The highest U.S. production in almost 30 years is reducing America’s demand for oil and giving consumers in Asia a greater choice of suppliers, from Venezuela to Alaska and Nigeria. The glut has driven futures into a bear market and prompted OPEC members to cut prices to defend their market share.
“Obviously the Middle East producers want to retain market leadership in Asia,” said B.K. Namdeo, the refineries director at Hindustan Petroleum, India’s third-largest state refiner. “Availability is one thing, but the customers must get the price advantage as well.”
The U.S. imported 7.62 million barrels a day of crude in July, down 29 percent from the peak in June 2005, data from the Energy Information Administration show. European consumption is also shrinking as refineries are shutting or converting to storage depots at the fastest pace since the 1980s after demand for oil products dropped.
Crude that may have previously found a buyer in the U.S. or Europe is now available for Asia and competing with traditional suppliers from the Middle East, according to the Paris-based International Energy Agency. Asia will account for more than half of global demand growth this year.
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