OPEC and Asia: Factors affecting the emerging product trade

Fereidun Fesharaki and David T. Isaak

Energy, 1986, vol. 11, issue 4, 387-403

Abstract: The structure of petroleum demand in the Asia-Pacific region is undergoing a fundamental change. Demand for heavy fuel oil in power generation is declining as the oil substitution policies of the regional government proceed. At the same time, the regional refining industry is unable to crack the unwanted fuel oil into lighter products. As a result, a major imbalance between product supply and demand looms ahead. Adding to the imbalance are the new Middle East export refineries, expected to flow between 1985 and 1987, which will probably send 40% of their products into the Asia-Pacific region. Thus, the region is faced with a great increase in product trade at the expense of crude trade, resulting in lower refinery utilization and perhaps some refinery closures. Since Japan may not be willing to open its market to product imports, the large flow of product will result in depressed product prices and a weak market. Although the imbalances in the system may be troublesome for some governments and the industry, they also present many trading opportunities. This paper discusses the factors that affect product trade in the region.

Date: 1986
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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:11:y:1986:i:4:p:387-403

DOI: 10.1016/0360-5442(86)90125-8

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