The Middle East suppliers dominate Asian markets; they hold a 53 percent share of oil imports to the region. Russia is dominant in Europe and domestic suppliers dominate U.S. markets. China, India, and other Asian importers get a majority of their supplies from Saudi Arabia and its Persian Gulf neighbors. Asian markets have greater importance to the Middle East than any other zone because they have large demands for imported oil. The United States has developed a substantial oil supply from its vast oil shale fields. Asian markets are the latest price battleground as global oil leaders compete for market shares.

Suppliers Offer Oil Price Cuts

Sellers set an oil price by regional benchmarks; in the United States, the West Texas Intermediate benchmark is a standard for producers. In Europe, the Brent Blend Benchmark is the primary price standard. Saudi Arabia is a prime example of a supplier that uses low oil prices to build market share. The Saudis and the U.A.E. recently announced price cuts to the Asian markets. The Saudi price cut of 90 cents per barrel demonstrates their priority and resolve to capture a greater share of the Asian market. In November, 2014 Saudi Aramco cut prices to the U.S. to compete with falling oil prices from U.S. producers. In recent days, Saudi Aramco increased prices for U.S. delivery by 15 cents per barrel. In Asia, Saudi Arabia faces competition from other OPEC exporters, and some of them have similar advantages of low production costs and ample economic reserves to withstand a period of low prices.

Europe and Americas Get Increases

Saudi Arabia and other Middle East sellers have raised prices to Europe and the United States. They do not regard competition for market share as a high priority in these regions. The strength of U.S. shale production makes extreme gains unlikely. Europe has imposed sanctions on Russia, and the notion of increasing purchases from Russia is remote. The U.S. markets value the strength and reliability of Saudi Arabia, Kuwait, U.A.E., and other long-term partners.

China Is the Largest Consumer

China imports approximately 6.6 million barrels per day; it is the world’s largest oil importer. The Chinese economy is growing, and its middle class has gained in purchasing power. Consumer spending includes increased use of personal transportation, and China has an aggressive passenger railroad industry. The Chinese economy is diverse, and its manufacturing and agricultural sectors use crude oil and petroleum products. Saudi Arabia increased exports to China by 15 percent in January over previous months.

Asian Importers Are Important markets

India, at 4.4 million barrels per day, South Korea, at 2.3 million barrels per day, and Japan at 2.7 million barrels per day are also among the leading oil importing nations. They benefit from falling prices and increased availability of supplies. Many of these importers have stockpiled supplies and also reduced government support for domestic consumption. India, like China, has a large population and a growing middle class. Their needs for oil include transportation, agriculture, and manufacturing. Japan is a mature economy and is dependent on imports for a large percentage of its needs. South Korea is an emerging leader in manufacturing and technology.

Middle Eastern Gains

The Middle East has gained in China and the Asian markets at the expense of West Africa, and Latin America. Already having lost much of the U.S. market, African and South American exporters have strong incentives to expand in Asia. Russia has made preliminary agreements with India for natural gas and is also eager to gain market shares from crude oil. There will be long-term market re-alignments as a result of this era of low world oil prices and competition for the critical Asian market.