Saudis deal blow to small rival in top market

By Tsuyoshi Inajima on 1/31/2018

TOKYO (Bloomberg) -- OPEC producer Qatar is paying the price for top member Saudi Arabia’s oil strategy in Asia.

Oil exports from Qatar, one of OPEC’s smaller crude producers, to Japan last year slumped by almost a quarter to its lowest level since 1990, while shipments from giant supplier Saudi Arabia grew 8.1%, boosting its market share in the Asian nation to a record. Over in South Korea, imports from Qatar sank 26% to the least in seven years.

The diverging fortunes may be a reflection of Saudi Arabia’s strategy to retain market share in Asia, the world’s biggest oil-consuming region, while leading oil-production cuts by the Organization of Petroleum Exporting Countries to clear a global glut. Stakes remain high, with oil prices still languishing at about 40% lower than their peak in 2014.

The Saudis have been making bigger supply curbs to the U.S. and Europe while largely sparing Asia from the reductions, as the kingdom sees better profits in the region. That’s enabling it to nudge out smaller rivals, according to the Japan Oil, Gas and Metals National.

“Qatar is suffering from the repercussions of Saudi’s sales strategy,” Takayuki Nogami, the chief economist at state-backed Jogmec, said by phone. “With crude prices still much lower than its peak, losing its sales volume to Japan and South Korea is a double blow to Qatar.”

Japan’s crude imports from Qatar fell 23% to 86 MMbbl in 2017, according to data from the Ministry of Finance. South Korea’s imports from the nation fell to 65 MMbbl last year, the lowest since 2010, according to data from state-run Korea National Oil.

From Saudi Arabia, shipments to Japan rose 8.1% last year, while market share rose to a record 40.2% in 2017. South Korea’s crude imports from Saudi Arabia slipped 1.6% to 319 MMbbl, down from the highest since at least 1980 the previous year.

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