Oil trade has flourished between Gulf National Oil Companies (NOCs) and Asian NOCs and this is reflected more broadly in trade relationships between other Arab Gulf exporters and importers throughout Asia. What’s more, this trade interdependence is set to expand further over the next decades. Future demand growth will come from Asia -- while demand for Middle East crude in North America is on the decline.
It is well known that Asian importers are concerned about their dependence on Gulf producers, but increasingly this concern is equally shared by Middle East exporters. They need to lock in growth markets in Asia and seek to expand their downstream activities there. The NOCs of the Gulf Cooperation Council (GCC) and Iraq are turning their attention eastwards.
Business and diplomacy will be increasingly intertwined in this energy relationship. The strategic importance of the relationship to both sides has led trade and investment deals to be backed by governments. Bilateral agreements are multiplying -- often imposing governments as new business partners for NOCs, accustomed to negotiating on their own.