By Arif Hüdaverdi Yaman
Oil importing countries could benefit from weak oil prices which are at their lowest in four years and the outlook seems they will dive further in the coming months.
While oil exporting countries become alarmed, the free fall in Brent prices may relieve oil importing countries' budgets. Top oil importing countries like the U.S. and China could save billions of dollars from the weak Brent prices.
The downward trend in crude prices since July 2014, mainly because of the surplus in oil supply due to the global economic recession, has reached its lowest point since the last four years. While these low prices threaten countries like Russia whose economy depends mostly on oil exports, net oil importers could save billions of dollars.
- The U.S., the biggest net crude oil importer with approximately 3.6 billion barrels in 2013, has spent $391 billion on oil imports. This amount could drop to $326 billion if prices continue on the average October Brent crude price of $90.6 for 2015.
- China, the biggest oil importer after the U.S., with 1.9 million barrels of oil imports in 2012, could reduce its oil import bill by $35 billion with the average October Brent crude price.
- Turkey's $15 billion oil import bill for 2013 could also fall by $3.2 billion next year if the current prices remain.
"In some countries where there were significant subsidies on diesel, kerosene or other oil products, prices may not drop," said Gurcan Gulen, from the Bureau of Economic Geology at the University of Texas.
"Government budgets have suffered because of the heavy burden of subsidies. Those countries may decide to keep the price level as it is and get some relief from the reduced crude import bill," he added.
Exchange rates, however, remain as a vital factor for countries like Turkey to maintain a reasonable benefit from low crude prices. Because Turkey buys oil and oil products with the dollar and sells in Turkish Lira, the exchange rate has a very vital role in determining oil products prices, according to Niyazi Ilter, the secretary general of the Turkish Oil Industry Association.
Turkey cannot expect a decrease in oil product prices unless the exchange rate remains stable, even when the Brent prices continues to fall, Ilter added.
www.aa.com.tr/en
15/10/14
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