Crude goes down in Asia

Singapore: (Monday, July 16, 2012) After slight improvement in the week ending on Friday, the oil prices in the Asian markets are again witnessing a down turn trend. And this time, the main reason behind the decrease in oil prices
is Saudi Arabia and United Arab Emirates decision to open crude pipelines bypassing the Strait of Hormuz, which, Iran had repeatedly threatened to close down.

For the oil delivery in August, New York’s main contract shed 34 cents striking it at $ 86.76 a barrel and Brent North Sea crude for delivery in August went down for five cents to close the deal at $ 102.35 per barrel.

The alternative crude transport routes created together by the UAE and the Saudi Arabia pipelines have alleviated supply concerns which had been held hostage by Iran in negotiations with the West over its nuclear program.

Commenting over the situation, the IG Markets said in a report, “Very quietly and strategically Saudi Arabia and UAE have opened up pipelines that allow it to bypass the Strait of Hormuz which up until now has been the trump card
for Iran in its bargaining with the West.”

It further added, “This fresh transport oil link should help weaken the threat of supply disruption coming out of Iran and force it back to the negotiating table.”

Through this newest pipeline, that was inaugurated on this Sunday, the UAE and Saudi Arabia has got the capacity to pump 500,000 barrels of oil from the emirate to Fujairah oil terminal on the Gulf of Oman.

The pipeline will be fully operational by August, and will have an initial capacity of 1.5 million barrels per day which will eventually be increased to a maximum of 1.8 billion barrels per day.

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Posted by Fayyaz Yaseen on Jul 17 2012. Filed under Business, Pakistan, World. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry