China & India in talks to form anti-OPEC

now, that may be interesting...

  • India and China are working together to seek better bargains from the cartel of oil exporting countries
  • The two sides kicked off formal talks in Beijing on Monday for forming an oil buyers’ club
  • The development is likely to weigh on Opec ministers, who are expected to discuss plan to end production cut deal later this month

https://timesofindia.indiatimes.com/business/india-business/india-china-in-talks-to-form-bloc-against-opec/articleshow/64579952.cms

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Reminds me of the informal LNG importers cartel that grouped together a while ago.  They managed to exert enough collective pressure to force some 20 year LNG importing contracts to get renegotiated.  LNG Spot Market activity has increased, and the earlier model of 20+ years delivery contracts has been broken. 

The U.S. also kicked the long term market in the teeth by allowing re-selling of LNG shipments, which were expressly prohibited in the earlier long term contracts from Oz.

Since the OPEC cartel has been allowed to persist for decades, it makes perfect sense for China, India, and other large importers of oil to form a collective bargaining group, as a counter-balance to OPEC machinations.  What's good for the goose is good for the gander.

MbS is prolly getting angina right now about China + India's plans.  Won't somebody please think of the Aramco IPO ?

Think-of-the-Children.jpg

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This is going to be very interesting. 

I wonder if, like OPEC, other countries will start to join this anti-OPEC, or OPIC (Organization of Petroleum Importing Countries).  If so, larger bulk orders from a single buyer's club will result in a deeper discount per barrel.  I also find it hilarious that China and India want to use U.S. shale production as leverage against OPEC. 

While China and India haven't always been on the friendliest of terms, both countries have friendly relations with Russia.  Russia had stated months ago that it was comfortable with an oil price of around $70 a barrel.  Now that we have reached that price point, we see that Russia wants to resume pumping at full throttle.  Will Russia provide cheaper crude oil to their Chinese and Indian customers at a time when Saudi Arabia is raising the cost of crude for Asian customers?  It would be interesting how Saudi Arabia responds under these circumstances.  While I believe Saudi Arabia still wants a price of $88 a barrel, they're going to pump more if Russia pumps more, as they're not going to cede all that market share to Russia. 

While Russia did not officially join OPEC and can technically pull out of the deal at any time, we don't fully know what new ties have formed between Saudi Arabia and Russia since the deal was initiated.  I've heard that Saudi Arabia has invested in Russian oil fields and Russia has invested in Saudi oil fields throughout the past couple years.  Other articles have pointed to this OPEC/NOPEC deal lasting beyond 2020, possibly for decades.  I would think Russia isn't stupid enough to tie their hands in becoming a de facto member of OPEC and that the long term deal they have is more to do with preventing a 2014-to-2016-style price crash from ever happening again. 

I have a feeling that China is going to try and get the OPIC buyer's club to purchase oil through the new yuan-denominated Shanghai oil benchmark, strengthening their petro-yuan.  If OPIC is a Shanghai-based entity, U.S. sanctions on Iranian (and possibly Venezuelan) crude could potentially be side-stepped. 

 

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GeoSciGuy, seems we read similar materials.  I'm somewhat disconcerted reading your comment, as your views sound very much like mine (that's unusual for me).

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4 minutes ago, Tom Kirkman said:

GeoSciGuy, seems we read similar materials.  I'm somewhat disconcerted reading your comment, as your views sound very much like mine (that's unusual for me).

Hey Tom!

Being that I read OilPrice.com and forum discussions on a daily basis, I'm not surprised we read similar materials.  You've actually provided a good portion of that material.  I also like to read the E&P Magazine app.

My comment is mostly speculation, based off the the articles and discussions I read and my understanding of the oil markets.  I'm quite flattered being told my views are similar to yours. 

-Bradley Silva

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Bradley, thanks for your kind words.  I'm at a loss for words, and again, that's unusual for me.

Please do keep reading and voicing your opinions as you see fit.

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It seems that we have three options for the OPEC summit. The big hike supported by Russia, the middle hike supported by Saudi Arabia and the status quo supported by Iran.

 

1'000'000 b/d increase : Russia  (with US, China and India as cheerleaders from outside OPEC)

500'000 b/d increase : Saudi Arabia, UAE, Kuwait

0 b/d increase : Iran, Iraq, Venezuela, Angola

 

I suppose that most of the other OPEC members are for the status quo option but feel free to add your info

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1 hour ago, Guillaume Albasini said:

1'000'000 b/d increase : Russia  (with US, China and India as cheerleaders from outside OPEC)

I'd say these are three huge cheerleaders. I also very much like the idea of China using the OPIC to promote the yuan. Sounds very plausible, makes perfect sense.

Tom, your comment about MbS brought me to tears. Alas, life is cruel.

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Hi all,

Looking forward to seeing what's going on in the oil industry

 

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1 hour ago, Marina Schwarz said:

Tom, your comment about MbS brought me to tears. Alas, life is cruel.

Laughter is the best medicine : )

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On the very first look on oilprice.com, thrilled to see exciting world!

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great thread! Definitely not good news for Venezuela, how about it? China, a critical ally for Venezuela now thinking about forming an anti OPEC? And also India, another buyer of venezuelan oil???? Making the game for the U.S. since Trump has been staunchly so anti OPEC? Definitely great developments in world oil markets. 

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Definitely a weird situation unfolding in the global oil market right now as well as in geopolitics as traditional longstanding alliances are not so traditional and fixed as they were before. But to what extent the U.S., India and China want to diminish the role of OPEC? Or is it aimed towards the entire OPEC or just countries like Iran and Venezuela? It will be interesting to see a new dynamics if the OAPEC decides to move away and create its own bloc away from the rest of non arab countries for example, a little more prone to Washington. In my view a total unseen situation in global oil markets and will get even more interesting in coming weeks and months... 

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Excellent, let's kill OPEC. I would prefer the NOPEC legislation though.

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China is consuming around 12.5 mbd and India is consuming  4.5 mbd, so both countries alone are consuming around 17mbd that is half of the total production of OPEC.So i think OPIC have a great sound  in the industry 

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After we tire of debating the supposed actions of buyers and sellers in non-existent cartels who are guided only by self interest, may I suggest that our next topic is "How many angels can dance on the head of a pin?"

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On 6/14/2018 at 9:30 PM, GeoSciGuy said:

According to a Bloomberg article, it's mainly U.S. oil that China and India want import to counter OPEC.  

https://www.bloomberg.com/news/articles/2018-06-14/prized-oil-buyers-mull-uniting-on-u-s-crude-to-fight-opec-clout

This is a win for U.S. oil producers and the petro-dollar, especially if Japan and South Korea join the buyer's club.

So now that China's mulling over US oil and gas sanctions--sorry, tariffs--things should get even more interesting.

@William Edwards, we know the answer to this one: 16, if it's an ordinary house pin.

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According to my analysis, I believe such bloomberg proclaims not completely realistic, as India largely depending for its large refineries plants on the closer Soudia Arabia (SA),  as well SA is now investing in erecting new refinery in India..(India buying it cheaper for example for its refineries fed thru pipes as well buying the less pure by lesser price..) etc, also China becoming more politically more clever than ever before, that means, yes it will import from USA, the power who has the greatest influence on OPEC, but never leave Russia or Iran.. the problem the OPEC is the main complicated issue to world oil, becuase its being controlled in a way as to make priceses to serve poliltical matters/agenda and this the hardest topic to be absorbed easily, as by the virtue of OPEC  prices can flucuate from $20 to $70, less or more as strategically directed.. this is my analysis.. I disagree with bloomberg unrealistic view.

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