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Oil buyers focus on quantity

28/03/2005 10:03
The repercussions from the sharp changes in the global oil market have affected the consumers and the business world of Cyprus. The increased demand for crude oil has affected not only the price of oil but also the way that the simplest business activities are carried out.

The increased demand in Southern and Eastern Asia pushed the price of crude oil up to $50 per barrel, forcing Cypriot consumers to buy more expensive fuel by 12.6%. “In the 90’s, the demand for crude oil increased by 1 - 1.15 million barrels per annum. In 2004 and 2005, we see that demand increases by 1-2.4 million barrels per day. We live in a period driven by demand”, Iraqi-Cypriot Head of Economic Section of Al-Hayat newspaper, Walid Khadduri told StockWatch on Monday.

Competition among buyers

The increased demand after the rapid growth of China and India has contributed to the increase in the demand of oil products. “We no longer negotiate the price of our orders. We simply focus on quantity. The demand of petrochemical products by Asian countries has increased the European supply to these countries. This part of production (sent by Europe) is sent back in the form of ready products at half the price. Developments in the spot market are more or less the same”, a Cypriot petrochemical importer told StockWatch.

However, the effort to obtain quantities does not secure profitability. “The increase in the raw material cost affects the profitability of the company. We cannot burden consumers, due to the competition from imported goods”, Lordos Plastics Executive Chairman, Pantelakis Kyriakides said.

Production

“We are currently consuming 82 million barrels per day, while all production limits have been consumed except those of Saudi Arabia. The trial balance in the market can be reversed easily in case of an unexpected event, such as a US-Iranian showdown, a bomb in Iraq and deterioration in the relations between the US and Venezuela”, Mr. Khadduri said.

Mr. Khadduri avoided giving forecasts on the future price of crude oil. However, “OPEC aims to maintain prices at $40 to $50 per barrel, which is €30-€32”, “Hellenic Petroleum General Manager in Cyprus, Akis Pigasiou said.