How Important Is OPEC To Thailand?

For the past 50 years, OPEC has held a tight grip on the world’s oil
market. As of September 2018, the then 17 member countries
accounted for an estimated 44 percent of global oil production and 81.5
percent of the world's "Proven" oil reserves. This dominance has made
countries like Thailand reliant on OPEC for its crude imports.
However, things are now changing. Last year, the United States
surpassed Russia and Saudi Arabia to become the world’s largest crude
oil producer. U.S. crude oil production exceeded that of Saudi Arabia for
the first time in more than two decades. In June and August of last year,
the United States surpassed Russia in crude oil production for the first
time since February 1999.
U.S. crude oil production, particularly from light sweet crude oil grades,
has rapidly increased since 2011. Much of the recent growth has
occurred in areas such as the Permian region in western Texas and
eastern New Mexico, the Federal Offshore Gulf of Mexico, and the
Bakken region in North Dakota and Montana.
The U.S. now produces so much oil that it has become a net exporter of
crude oil. This has allowed Thai oil companies to purchase U.S. crude
and not have to rely any longer on OPEC. It was reported by the
Bangkok Post last year that US exports to Thailand will increase to at

least 2 million barrels. State oil company PTT Plc is 1 million barrels of
WTI Midland, while Thai Oil and Esso Thailand bought at least 500,000
barrels of Bakken crude each.
This is a big deal and big cost savings for Thailand as U.S. crude is
cheaper than Brent North Sea by almost $8. Have a look at the charts
for each.

By being able to purchase cheaper crude oil from the U.S., it directly
boosts the bottom lines of PTT Public Company Ltd (PTT) and Thai Oil
Public Company Ltd (TOP). By using cheaper U.S. crude in refining,
these companies make more money selling gasoline and diesel.
This ability for Thai oil companies to purchase from the U.S. is very
important as I expect oil prices to continue climbing, at least into the
summer before dropping in the fall. This is a seasonal demand pattern
that occurs every year, particularly in the US where we have the summer
driving season. Schools in the U.S. are off for the summer months and
most parents take their kids on vacation and most drive. With more cars
on the road, demand for gasoline and diesel is at the highest point of the
year.
Now that the U.S. is the world’s largest crude producer and exporting to
Thailand, OPEC is not as important to Thailand as it once was.