Since the beginning of 2026, political developments in Venezuela and statements by the US administration about increasing oil production and global supply have reignited debate over the future of Gulf oil and its position in international markets.
Questions have emerged about whether additional supplies from other producing countries could weaken the importance of Gulf crude or undermine its competitiveness.
However, beyond production volumes and oil reserves, the numbers reveal another important dimension of competition: the cost of delivering a barrel to its destination, shipping times, and how efficiently refineries can process different crude grades.
Speaking to Al Riyadh, Ali Al-Riyami, former Director General of Oil and Gas Marketing at Oman’s Ministry of Energy, explained that the competitive advantage of Gulf oil extends far beyond its selling price. Transportation costs, logistics, and refining profitability also play crucial roles.
$7.5 Million Saved on a Single Shipment
Al-Riyami highlighted figures from the maritime shipping market showing significant differences in the cost of transporting crude oil to China.
According to his estimates, shipping costs from the Gulf to China have reached approximately $11.5 per barrel under current conditions of heightened risk and elevated freight rates.
By comparison, some shipments of US crude to China have recorded transportation costs of approximately $19 per barrel.
This represents a difference of around $7.5 per barrel, equivalent to a potential saving of $7.5 million on a single shipment of one million barrels.
The competitive advantage is not limited to financial savings.
A crude oil tanker travelling from the Gulf to China typically takes approximately 12 to 20 days, compared with 35 to 45 days for shipments from the United States, according to Al-Riyami’s estimates.
This means Gulf crude can reach Asian buyers roughly two weeks to a month earlier, depending on the ports and shipping routes involved.
The shorter journey offers more than just a logistical advantage. It also provides importers with greater flexibility in inventory management, reduces financing requirements during transportation, and limits exposure to market fluctuations while cargoes are at sea.
Four Advantages Supporting Gulf Oil Over the Next Decade
Al-Riyami identified four major economic factors that could strengthen the competitiveness of Gulf crude in Asian markets over the next ten years.
First: Geographical proximity.
The Gulf remains one of the closest major oil-producing regions to Asia’s largest energy-consuming markets, particularly China, India, and Southeast Asia.
Second: Transportation costs.
As maritime freight rates and insurance premiums increase, proximity between producers and consumers becomes more economically valuable.
In this environment, geographical distance translates directly into measurable financial savings on each barrel and shipment.
Third: Spare production capacity.
Several Gulf producers, particularly Saudi Arabia and the United Arab Emirates, maintain spare production capacity that provides greater flexibility in responding to market fluctuations and supply disruptions.
However, this capacity varies significantly among oil-producing countries.
Fourth: Stronger ties with Asian markets.
Many refineries in China and India are equipped to efficiently process Middle Eastern crude grades, reinforcing long-term commercial relationships between Gulf producers and Asian buyers.
Al-Riyami believes these four factors will continue to support Gulf oil’s competitive position, even as production increases in other parts of the world.
Gulf Crude Offers Advantages for Asian Refineries
The competitiveness of Gulf oil is not limited to geography and shipping costs. Another important factor is the compatibility of its crude grades with Asian refining facilities.
Al-Riyami explained that Omani crude and several medium-grade Gulf crudes offer a balance between purchase price and refining returns, depending on their technical characteristics and the configuration of the refineries processing them.
Very light crude is not necessarily the most profitable option for every refinery, while heavier grades may require additional processing facilities and higher operating costs.
Therefore, the economic value of crude oil depends on several factors, including its price, physical characteristics, refinery capabilities, and the market value of the petroleum products produced.
According to Al-Riyami, Asian refineries that are appropriately configured to process Gulf crude can benefit in three main ways:
First, these grades can provide attractive yields of high-value products such as diesel and jet fuel.
Second, consistency in crude oil specifications from one shipment to another helps large refineries maintain operational stability and efficiency.
Third, the geographical proximity of Gulf oilfields and export terminals to Asian markets reduces shipping, inventory, and financing costs.
Consequently, Asian buyers do not assess crude oil solely on its purchase price at the export terminal. They increasingly consider its total delivered cost and the expected returns from converting it into refined petroleum products.
Geography Becomes an Economic Advantage
Al-Riyami believes that future competition among oil-producing countries will not be determined by selling prices alone.
Transportation costs, supply reliability, and compatibility with refining infrastructure will play increasingly important roles in determining the commercial attractiveness of crude oil.
“The competitive advantage of Omani and Gulf oil today is no longer limited to the price of a barrel. It is increasingly determined by the cost of delivering that barrel to the refinery,” Al-Riyami said.
“When Gulf crude can reach Asian markets almost a month earlier than US crude and save millions of dollars in transportation costs on a single large shipment, geography becomes a genuine economic advantage.”
He added: “As geopolitical risks increase and shipping costs rise, I believe proximity to Asian markets will become more valuable than ever in the coming years.”
Although increased oil production in the United States or Venezuela could expand global supply, competition in Asian markets will continue to depend on a broader economic equation.
That equation includes the price of crude oil, transportation costs, oil quality, supply security, and the overall value delivered to the final consumer.
For Gulf oil producers, these factors could remain important competitive strengths in an increasingly complex global energy market.