Two of Asia’s largest crude buyers are considering teaming up to buy U.S. supplies and counter OPEC’s dominance in the world’s biggest oil market.
India and China are discussing ways to boost imports of U.S. crude to Asia, a move aimed at reducing their dependence on cargoes from members of the Organization of Petroleum Exporting Countries, according to an Indian government official. The two nations want to put pressure on OPEC producers to keep prices under control, he said in New Delhi on Wednesday, asking not to be identified because of internal policy.
The potential collaboration between the two major oil buyers would present another challenge for OPEC, which is facing competition for market share in Asia from the flood of crude pumped in the Gulf of Mexico and shale fields of Texas.
The group is also contending with internal differences: Saudi Arabia favors easing output curbs implemented last year after they succeeded in shrinking a global glut, while Iran, Iraq and Venezuela oppose boosting production.
“Diversification of supply sources will benefit both India and China by increasing competition among oil producers,” said Abhishek Kumar, an analyst at Interfax Global Energy in London. “Procuring oil at the cheapest price is vital for the two energy hungry Asian consumers.”