Oil Resilience In Asia

Volatile oil prices have major implications for the region

Perception is relative. Entering 2017, oil prices are hovering around $50 per barrel, down from their peak – above $100 – in 2014.

Compared to where prices stood 12 months ago, however, the current price of oil is 50 percent higher. Choosing to see the glass as half-empty or half-full depends on whether one stands to gain or lose from lower prices.

Asia’s top 10 oil-importing countries accounted for 44 percent of global imports in 2015. (See Exhibit 1.) As a region, it is the world’s largest importer of oil. So it’s easy to see why the World Economic Forum’s recent annual Executive Opinion Survey finds “energy price shock” to be a key concern for business executives in the region.

A sustained period of lower oil prices would seem beneficial for the region. However, to understand the economic impact of this in a meaningful way requires deeper consideration.

The industry is positioned within a much broader economic ecosystem impacted by price shifts. Stakeholders in this ecosystem include governments, energy-intensive industries, the financial sector, and end users, areas worth exploring in more depth.

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A net oil trade map of Asia

Sources: APRC Analysis of BMI Research, BP Statistical Review,
and the World Factbook (Central Intelligence Agency)

About Author

Blair Chalmers is a director at Marsh and McLennan Companies’ Asia Pacific Risk Center.

Oliver Wyman is a division of Marsh and McLennan Companies.

This article first appeared in BRINK Asia.

Oil Resilience In Asia