After OPEC and Russia announced that it would be cutting their oil production in 2018 the Asian refiners are ordering oil from the Caribbean and the Gulf of Mexico. This can result in Russia and OPEC losing a large part of the market share. They have been looking to cut down on oil production to increase the prices in the market. The plan has been there since January and would be there until March 2018. But OPEC along with many non-OPEC producers wants to extend the cut in production until the end of 2018.
Despite the cut in production, the oil supply is enough. Even before the Organization of the Petroleum Exporting Countries made the announcement about the cut, refineries in Asia had already started to make inquiries for oil shipment from other countries such as the Gulf of Mexico and the Caribbean that includes Mexico, Venezuela, the United States along with Colombia.
A broker working in the crude oil shipment industry said that there had been inquiries from Asia for oil tanker shipments. With OPEC and Russia extending the production cuts for the whole of 2018, these inquiries are quickly turning into orders. The person who placed the order did not want to reveal his identity as he was not authorized to talk to the media about the orders.
With OPEC and Russia cutting the oil output, it is good news for the US since it will be able to increase its production and its market share too. On Friday, Barclays Bank sent a note to its clients with the title 'Christmas comes early'. They expect to double their US production and their exports to China while OPEC will be looking at a decrease in the market share.
According to shipping data, oil shipments are already seeing an increase from the Gulf of Mexico and the Caribbean to countries in Asia mainly China, Japan, Taiwan, Singapore and South Korea. The demand has already increased from half a million barrels per day in January to 1.2 million bpd in November and December. The largest export is being seen from the United States. Last week, the US oil production hit a record high of 9.68 million bpd. The real winners are the US producers. Even the shippers are benefiting from it as the route from North America to Asia is the longest trade route. It can easily lead to a more significant rise in trade routes which means a long-term for the shipping industry.