Oil price hike a new headache for Asia<\/p>\n
SINGAPORE (Reuters): If global oil exporters get their way,
\nnet importer Asia will feel the bite of the highest crude prices
\nin more than 15 months, analysts said on Monday.<\/p>\n
\"For the oil importing countries of Asia, a sharp rise in the
\noil prices would be a significant setback for economic recovery,\"
\nJohn Russel, managing director of Bangkok-based Petroleum
\nEconomics Ltd said.<\/p>\n
The oil import bill would start to affect the balance of
\npayments and slow down the pace of deregulation in some countries
\nwhich are trying to generate competition.<\/p>\n
The only hope is that oil prices will rise slowly to reduce
\nthe impact on regional economies, which are trying to emerge from
\n20 months of economic crisis.<\/p>\n
Obvious gainers to a higher oil price would be major
\nproducers, like Malaysia and OPEC member Indonesia.<\/p>\n
Oil producers agreed in a meeting in The Hague on Friday to
\ncut more than two million barrels per day from production. That
\nwould represent around 2.6 percent on global supply of 75 million
\nbpd.<\/p>\n
The pact could jet prices to between $15 and $18 per barrel in
\ncoming months. Benchmark Brent, which stands around $12.56 per
\nbarrel, has not traded above $18 since December 1997.<\/p>\n
Oil prices have been muted to the deal so far, but analysts
\nbelieve it could prove a turning point for oil, which is
\nlanguishing near 12-year price lows.<\/p>\n
Saudi Arabian oil minister Ali al-Naimi, one of the major
\narchitects of the latest agreement, believes world oil stocks
\nwould be back to normal by June and prices could rise $4 per
\nbarrel.<\/p>\n
Some analysts are skeptical such quick price gains will result
\nfrom the pact because of the huge overhang in oil stocks. But
\nthey said the agreement could be the final measure needed to get
\noil prices on a sustained recovery by the end of the year.<\/p>\n
For Asia, which imports around 13 million barrels per day
\n(bpd) of its 19 million bpd consumption, it means higher import
\nbills.<\/p>\n
But with a few weeks before the start of the April-March
\nfiscal year, governments have time to juggle their budgets and
\naccommodate a higher import price for oil.<\/p>\n
During the slump in oil prices to 12-year lows in 1998, Asian
\neconomies did not particularly gain because the benefit was
\noffset by weaker currencies.<\/p>\n
But a rising oil price could swing that balance to putting
\npressure on dollar expenditure because currencies are far from
\nrecovering to pre-crisis levels.<\/p>\n
\"Clearly, it would be quite negative in terms of disrupting
\nthe process of stabilization of countries in the region. It could
\nprolong the relative recession,\" Russel said.<\/p>\n
In addition, it would set back marginal demand for oil,
\nespecially in deregulating countries where competition is
\nbecoming increasingly price sensitive.<\/p>\n
For net oil exporter Indonesia, Asia's only member of OPEC, a
\nmuch higher oil price would add significantly to the government's
\ncoffers at a time when it is struggling to shake off recession
\nand a sunken currency.<\/p>\n
The government has budgeted oil prices at just $10.50 per
\nbarrel for the year starting April 1, down from $13 in the
\ncurrent fiscal year ending March 31.<\/p>\n
In February, the government's average sales price for its
\ncrudes was 10.69 per barrel.<\/p>\n
Mines and Energy Minister Kuntoro Mangkusubroto said earlier
\non Monday that the government had not yet decided whether to
\ncommit any of its crude production, which analysts estimate at
\n1.36 million bpd, to the latest round of cuts. OPEC meets next
\nweek in Vienna.<\/p>\n
\"All options are open,\" he told reporters.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/oil-price-hike-a-new-headache-for-asia-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }