Oil price surges to 9-year high

Asia consumes around 19 million bpd of crude but needs to import around 12 million bpd, making it vulnerable to oil price rises. That means a rise in crude prices is a negative for the economy, although producers like Indonesia, Malaysia, Vietnam and Australia stand to benefit.

Indian petroleum minister Ram Naik said on Wednesday he expected India’s import bill for oil to balloon out to Rs 54,000 crore ($12.4 billion) in the year to the end of March, compared with an import bill of Rs 24,000 crore in the previous year.

India, which consumes about 1.8 million barrels per day (bpd) of crude, most of which is imported, was also considering raising the domestic diesel price again, the minister said. A decision would be made by the end of November.

In October, India raised domestic diesel prices 40 per cent, sparking a nationwide strike among transport workers. Japan, which represents a quarter of Asia’s oil consumption, said on Thursday the surge in crude oil prices would have an adverse impact on the nation’s industry.

"We are basically concerned over the situation. If crude oil prices continue their giddy climb, that would not be desirable," an official of the ministry of International Trade and Industry (MITI) said.

The inability of Japan oil firms to pass on rising costs of crude oil by raising retail prices is weighing heavily on the industry. In Thailand, which imports around 700,000 bpd of crude, National Oil Company Petroleum Authority of Thailand raised diesel prices just under two per cent.

"The price hike came from pressure from rising prices in the world market," said Prasert Boonsamphan, PTT marketing director. "If average crude oil prices stay in the current range of $23-$25 a barrel, domestic retail prices would not come down and there are chances of them going up," he said.

Another country that would be under pressure to raise domestic prices would be the Philippines. The country has a deregulated market but prices rises in the past have prompted public demonstrations and strikes among transport workers.

In October, Philippine President Joseph Estrada said he was losing sleep over rising oil prices because the electorate was blaming him for the high costs of their fuel. Analysts have forecast that global oil stocks are falling so quickly that oil prices could rise much further in the months ahead.

The London-based Centre for Global Energy Studies said in areport on Monday that unless the Organisation of Petroleum Exporting Countries (OPEC) relaxes its production cuts, oil could hit $35 a barrel by the fourth quarter of 2000.

Data from Singapore earlier on Thursday showed the oilstocks of the pivotal export centre were down around levels not seen for more than two years. US data showed gasoline stocks at a two-year low,although analysts said European stocks remained above 1997 levels. OPEC has said it wants to drive stocks down to the levels of 1996 or 1997 to balance the market.