Trouble is brewing anew in Asia as the US tightens sanctions on Iran's importation of oil to Asian countries. However, this might be a two-pronged approach; ready to fill in the void left by Iranian oil, is Texas, with their US 'shale' produce coming out of Eagle Ford in Texas and the Delaware Basin in New Mexico.
An unlikely trade partner, the US states that US shale is a lighter type of material compared to the Iranian produce, and the aforementioned basins are producing a huge supply since 2011. This was relayed to Oil Price by Sandy Fielden, Director of Oil and Products Research at Morningstar Commodities Research.
Asia, on the other hand, has grown a bit dependent and reliant on a larger capacity of petrochemical products. Shale, in particular, has been used in plants to produce materials like naphtha for blendstock. It is also usable in its raw form as feedstock, but the main goal is to create refined petrochemicals through these processes.
Japan, South Korea, and China have all been highlighted by director Fielden as prime users of the kind of naphtha that Eagle Ford's condensate product has been yielding. Other major markets in Asia are also being explored.
Fielden said that the US reserves are ready for export any time, citing that Iranian oil reserves may run out soon enough. Regardless of how much is still available for sale, the director highlighted that this is a big opportunity for the US-one that will open up a whole new market for US oil.
Iran, Houston Chronicle said, is in a pinch. While the US may have sanctioned its oil trading, Iran is also using more of its own oil domestically. This may cause the exports to run out sooner rather than later. That doesn't mean, however, that there are no more competitors to the US. Australia is also exploring its liquefied natural gas processing, and some condensate, similar to the ones the US has produced, is also available for export from the country.
The US may have been late to the party. Several other countries like Malaysia and Vietnam are producing condensate, and they may be cheaper than the US variant. Fielden said that time won't wait for them in the case of exporting condensates. Competition is already lining up to take over the void left due to the Iranian sanction.
