Asia’s oil bill will surpass US$1 trillion this year, about twice as much as in 2015 and 2016, amid a rise in crude prices and a stronger US dollar, Reuters reports.
“Asia is most vulnerable to an oil price spike,” the report cited Canadian investment bank RBC Capital Markets as warning in a note this month.
Oil prices have risen nearly 20 percent since January this year, reaching their highest levels in more than 40 months.
On Thursday, Brent crude topped US$80 per barrel in intraday trading, hitting that level for the first time since 2014.
With the US dollar – in which most oil is traded – strengthening, concerns are rising about the size of the hit to economies from higher energy prices, especially in import-reliant Asia, Reuters noted.
Surging costs could feed inflation and hurt both consumers and companies.
Asia-Pacific consumes more than 35 percent of the 100 million barrels of oil the world uses each day, and its share is steadily rising.
Asia is also the world’s smallest oil-producing region, accounting for less than 10 percent of output.
China is by far Asia’s biggest importer of oil, ordering 9.6 million barrels per day in April. That’s almost 10 percent of global consumption.
At current prices, this amounts to a Chinese oil import bill of US$768 million per day, or a whopping US$280 billion a year.
Other Asian countries are even more exposed to rising oil prices.
Most damage will be done to countries like India and Vietnam, which not only rely heavily on imports, but also where national wealth is not yet large enough to absorb sudden increases in fuel costs.
“Poorer countries with limited borrowing capacity may face financing difficulty amid higher import bills,” RBC said.
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