Thailand importing more U.S. oil as production rises

 

Responding in part to President Donald Trump’s urgings that trading partners buy more goods from the United States, Thailand is importing more American oil with commitments from Thai companies to purchase at least 2 million barrels of U.S. petroleum instead of sourcing that crude from other oversea sources.

The decision to purchase more oil from the U.S. is a boost for Thailand’s energy security, as it has been heavily reliant on Middle Eastern crude for decades. Diversifying the Kingdom’s sources of oil should, in theory, provide more resilience in the face of oil or energy shocks.

The Unites States has become more competitive in the oil markets since increasing production in part because of greater extraction of shale oil. Prior to the development of shale oil, the U.S. had been a net oil importer, also heavily reliant on Middle Eastern crude. American oil production had become scarce enough that in the1970s the government issued a ban on oil exports.

Washington lifted that ban two years ago, and since then “ tankers filled with U.S. crude have landed in more than 30 countries, ranging from massive economies like China and India to tiny Togo,” Reuters news agency reported earlier this year.

With oil prices rising in recent weeks to levels not seen in several years, at about $80 a barrel, American producers have been offering lower prices, by as much as $9 a barrel, making their product more competitive. That competition directly affects Russia, whose economy is dependent upon oil exports, and the Organization of Petroleum Exporting Countries (OPEC).

“We’re diversifying a lot to other regions. If Saudi Aramco still doesn’t reduce prices next month and ADNOC (Abu Dhabi National Oil Company) follows, we will increase our U.S. crude purchases,” a Southeast Asian oil buyer told Reuters.

Media reports said that Thailand’s partially privatized oil company PTT will buy one million barrels of WTI Midland, while Thai Oil and Esso Thailand bought at least 500,000 barrels of Bakken crude each. The companies, however, had declined to comment at press time.

Thailand’s main source of energy is natural gas. The Kingdom is also making a concerted push to develop and use more green or renewable energies, with a target of sourcing 25 percent of the country’s energy from renewables for 2036.