How Would The Recent Lifting Of US Oil Export Restrictions Affect Singapore?

The US had lifted restrictions on the export of its oil back in December 2015. It could be an important development in the global oil scene; according to CNN, the US was the third-largest oil producing country during the first-quarter of 2016 with output of 9.2 million barrels of oil per day.

The US Energy Information Administration (EIA) recently noted that the country had increased sharply its oil exports across the world. You can see this in the chart below:

EIA chart 1
Source: EIA

Where did all these exported oil go to? Parts of it came to Asia. For instance, China and Japan took in 10,000 and 17,000 barrels of oil daily from January to May 2016.

EIA chart 2
Source: EIA

As you can see from the chart above, Singapore is a major shipping transit point for oil to reach its final destination in China and Japan.

As such, Singapore could see steadily higher demand for oil services business as the US exports its oil through shipping to this part of the world. Since Singapore is a major trading hub, there could also be traders that might want to store oil near Singapore’s waters and wait to sell at more opportune moments. One company in Singapore’s stock market that builds oil-storage facilities as part of its business is Sembcorp Marine Ltd (SGX: S51).

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Ong Kai Kiat does not own shares in any companies mentioned.