Oil Prices Climb On Monday As Asia’s Oil Production Drops

Investing.com – Oil prices are up Monday morning in Asia, boosted by a new report from Rystad Energy forecasting oil production in East and Southeast Asia will drop by 20 percent between 2017 and 2025.

for April delivery were trading at $63.88 a barrel in Asia at 19:45am ET, up 0.52%. futures for April delivery, traded in London, were up 0.39% at $67.30 per barrel.

Oil production in Asia is eroding sharply due to natural depletion in mature oil fields. Total oil production in East and Southeast Asia is set to decline from 13.1 million barrels of oil equivalent per day (boe/d) to 10.4 million boe/d by 2025, according to Rystad Energy.

Underpinning the decline in output is the diminishing volume of new oil discoveries in East and Southeast Asia. The past decade and a half has seen fewer and fewer new sources of oil, while the limited volume of new oil discovered may not translate into production.

China’s oil production will decline the least, with the giant Changqing field continuing to support stable output and likely to contribute over 1 million boe/d over the next five years.

With that said, China’s output has still declined quite a bit in recent years. The International Energy Agency (IEA) predicts China will produce an average of 3.8 million barrels per day (bpd) in 2018, down by 0.5 million bpd since 2015.

Oil demand from East and Southeast Asia, on the other hand, is soaring. China emerged as a top buyer of U.S. crude last year. The shipment of crude oil that just left the newly upgraded Louisiana Offshore Oil Port (LOOP) also appears to be heading for China, and this will likely become an increasing trend.

BP predicts that China and India alone would make up half of total growth in global energy demand over the next 30 years, according to its annual Energy Outlook, released last week.

Oil markets are therefore well supported with Asia’s oil production dropping fast as its demand soars.

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