An Empirical Study of Asian Crude Oil Premiums

The price of Middle East crude oil exported to Asian countries has been higher than that to Europe and America for a long period, and this price differential made Asian countries pay more than European and American countries. Prior investigations found that "Asian Crude Oil Premium" did exist at a relatively low oil price level. However, world oil price soared after 2003, making the price of Middle East crude oil exported to European countries or America rise quickly, sometimes even higher than that to Asia. Under this situation, this paper uses the price of Middle East crude oil sold to Europe or America or Asia to test if the premium exists at a high oil price level and concludes that the crude oil price premium of Asia against America does not exist, but the premium of Asia against Europe still exists.