North Sea Oil Exports to Asia at 8-Year High

GRANT SMITH | FEBRUARY 2012 | SOURCE: Bloomberg

More North Sea oil is being shipped to Asia  than at any time in the past eight years as prices fall to their cheapest levels in 15 months compared with Middle East alternatives.

Brent traded at $2.41 a barrel more than Dubai crude on Jan. 13, the smallest difference since October 2010, PVM Oil Associates Ltd. data show.

North Sea Oil Exports to Asia at 8-Year High

Companies led by BP Plc (BP/) and Vitol Group have sent at least 8 million barrels of North Sea oil to Asian ports since mid-December, equivalent to six days of U.K. production, according to ship-tracking data from AISLive Ltd. That’s the most for any month since 2004, data from Galbraith’s Ltd., a London-based shipbroker, show.

Rising production in Libya, refinery closures from the U.K. to Switzerland and a drop in U.S. gasoline demand have created a surplus that’s weighing on the price of low-sulfur, or sweet, crude produced in the North Sea (EUCSFORT) and West Africa. That’s making it profitable for companies to transport the raw material more than 16,000 miles (25,700 kilometers) to Asia, where demand is outpacing the rest of the world.

“There’s a glut of light-sweet crude,” said Leo Drollas, chief economist at the Centre for Global Energy Studies, the London-based researcher founded by former Saudi Arabia Oil Minister Sheikh Ahmad Yamani. “It’s a demand-and-supply story. The return of Libya is part of it. Then there’s weak demand for gasoline in the U.S. It’s negative.”

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