AFP reported that global oil traders are nervously watching a dragging dispute over compensation between Sudan and breakaway South Sudan whose impact reaches beyond major buyer China.
The South announced that it had nearly completed a protest shutdown of its oil production the fledgling nation's top revenue source after talks in the Ethiopian capital Addis Ababa failed again to resolve a disagreement with Sudan over oil fees.
Khartoum admits to confiscating 1.7 million barrels of South Sudanese crude since vowing in November to take 23% of southern oil exports as payment in kind during the fee dispute.
While Juba's pre shutdown daily output of about 350,000 barrels per day pales against Saudi Arabia's more than eight million barrels, analysts said it is not insignificant.
Mr Tony Nunan energy risk manager at Mitsubishi Corporation in Tokyo said that "It's just another factor in the geopolitical risk that's causing the market to be nervous. The price of oil is determined by the marginal barrel, so it's important."
Deutsche Bank said that China receives 67% of Sudan's crude shipments accounting for 5% of the country's imports. Japan is also vulnerable as its demand for Sudan's medium sweet crude, burned for power generation has risen since last year because of nuclear power outages.
Malaysia, India and Indonesia are the other main buyers of Sudan's oil. Asian buyers already scrambling to find alternatives to Iranian oil are now faced with the prospect of having to scramble for alternatives to Sudanese oil.
More broadly, the loss of Sudanese crude oil further aggravates a global market already struggling to cope with multiple threats of supply disruptions in the face of low inventories and eroded OPEC spare capacity.
Mr Tamsin Carlisle senior editor in Dubai for energy market information provider Platts said that “With refiners concerned about the potential loss of Iranian crude volumes, the problems in Sudan have been cited as potentially leading to a tighter supply market in the second half of the year should the problem not be resolved."
Mr Salva Kiir president of South Sudanese accused Khartoum of stealing USD 815 million worth of oil since December largely by blocking four ships in Port Sudan and preventing four others from collecting their purchases.
Last week he rejected a draft agreement which proposed the South give Khartoum USD 5.4 billion to be paid by Sudan's taking 35,000 barrels of oil per day. He said that he could not sign a deal that did not address other unresolved issues as well as oil because an incomplete agreement would guarantee future conflict.
(Sourced from AFP)
