As workers at a further two US refineries walked out this this weekend in an ongoing industrial dispute, oil prices jumped back up to $58 per barrel. More than 5,000 workers affiliated with the United Steel Workers International trade union have joined the picket lines in the largest strike action of its type in 35 years. The 11 plants that are now affected by protest action account for about 2.3 million barrels per day of oil output or 13 per cent of daily refining capacity across the contiguous United States.
The USA is the world’s largest refining nation, outputting just under one fifth of all of the world’s crude oil-based products, more than the former Soviet Union and the Middle East combined. In October 2013, the country exported more than it imported for the first time since 1995, with many analysts proclaiming that North American oil and petroleum liquid production would hit the 30 million barrels per day mark by 2020.
While the world blames an increase of OPEC production for the 50 per cent nosedive in crude prices, another surprise is in brewing in the Near East. The last 12 months have seen the commissioning of three refining facilities - two in Saudi Arabia and one in the United Arab Emirates – as members of the Gulf Cooperation Council (GCC) aim to turn from unprocessed crude barons into exporters of refined petroleum products.
Europe has seen 13 refineries shuttered in the last five years. Some 4,000 kilometres closer to home than the traditional refining hubs in the Far East, the Middle East provides a more cost-effective solution for a region that consumes 21 per cent of the world’s oil. And this will be to the detriment of economies across both the Atlantic and the Pacific Oceans. The battle lines have been drawn up in the fight for the petro-Euro, and the side with the middle ground may have the upper hand….
Will the Middle East’s boost in refining capacity hurt the North American and Asian markets? Have your say here
Tim Haðdar is the Editor In Chief at Oil & Gas IQ. Reach Him At Twitter Or OGIQ
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