New era for oil reverberates through Asia’s shipyards to runways
Exploration firms, rig builders lead gains while aviation companies see declines
While the first Organisation of Petroleum Exporting Countries (Opec) production cuts since 2008 were inked as Asia slept, the winners and losers from the surprise deal are already becoming clear in the world’s biggest oil-consuming region.
US crude is hugging US$50 a barrel following Wednesday’s 9.3 per cent surge, the biggest since February, and Goldman Sachs Group is projecting further gains of more than 10 per cent by the end of the first half as the current oil surplus withers into a deficit.
A revival in prices could prove challenging to countries like India and China, which import most of the crude they consume. Yet the region is also home to some of the largest players when it comes to shipping and oil market infrastructure.
“It is extremely hopeful and optimistic for those traditional manufacturing companies in Asia,” Hong Sung Ki, a commodities analyst at Samsung Futures, said by phone from Seoul. “Oil explorers as well as steel companies that supply pipeline makers will start boosting investment and production as oil prices are on the rise in the long term.”
Asian energy stocks are surging the most in almost 10 months, with exploration companies such as Australia’s Santos and Tokyo-based Inpex Corp, Japan’s biggest oil and gas explorer, leading gains.
Rig builders are also rallying, amid speculation higher oil prices will encourage further exploration, fuelling demand for drilling equipment. Keppel Corp, the world’s biggest oil-rig manufacturer, jumped as much as 5.5 per cent to S$5.75 in Singapore, the most since June. Sembcorp Marine, the second-biggest, also surged.