SEOUL, Sept 13: Asian oil importers looking for more supplies to help dampen rising fuel costs received short shrift from the world’s top producers at a meeting in Seoul this week.
A biannual gathering of Asian energy ministers was clearly divided between exporters enjoying bumper revenues on one side and importers on the other struggling to pay for the oil and gas that fuels their economies.
Benchmark Brent crude prices traded near $112 a barrel on Friday, after spiking above $117 late last month on the virtual shutdown of production from Opec producer Libya and the prospect of US military action against Syria.
“High oil prices will have a negative impact on the Asian economy,” said Isshu Sugawara, Japan’s state minister for economy, trade and industry.
“This may lead to stagnant economic activity in Asia. To stabilise the international oil market, we request producers provide adequate supply to meet demand.” Japan’s energy import bill has risen sharply since 2011 due to the shutdown of its nuclear fleet in the wake of the Fukushima disaster. Not only is Japan the world’s third-largest oil importer, it is the top importer of liquefied natural gas (LNG).
Japan’s gas import prices are linked to oil, making high crude prices a double whammy. Fuel costs have contributed to record trade deficits and have hindered Prime Minister Shinzo Abe’s push to breathe life into a long-stagnant economy.
Pakistan, a much smaller importer, was more vocal. Producers were not doing enough, a top oil official told Reuters on the sidelines of the event on Thursday. As well as hurting consumers, this would eventually hurt the producers themselves as high prices reduce demand, said Arshad Mirza, additional secretary at the oil ministry.
“Producers are making lots of profits and it’s all geopolitics,” he said. “They heard our message very loud today.” Members of the Organisation of the Petroleum Exporting
Countries (Opec) said the blame for high oil prices was tension over Syria rather than any shortage of supply. Top producer Saudi Arabia has boosted its output to record levels to help meet the shortfall from Libya. But the Saudi oil minister saw no shortage.
“For the record, oil market fundamentals are good. The market is well balanced,” Ali al-Naimi told the industry event.
Opec said in a report this week that there was sufficient supply in the market to cover for Libya’s outage, and Opec Secretary General Abdullah al-Badri said at the meeting there is no need for the producer group to pump more.
“If we see there is a shortage in the market, we will act,” he told reporters. “We don’t see a shortage.” Opec’s sentiment on supply was shared in a monthly report on Thursday by the International Energy Agency, which represents industrialised consumers. Global oil supply should rise in coming months thanks to a mixture of seasonal, cyclical and political factors, the IEA said.
That was cold comfort for Asian buyers facing the impact of rising oil prices on economic growth. Some of Asia’s emerging economies have seen import bills shoot up even further due to weakening currencies. “Supply and demand say that if you have more supply than demand it will lead to lower prices,” said Loreta Ayson, undersecretary at the Philippines department of energy. “The oil price has a tremendous impact in my country.” —Reuters