* Asian refiners shift towards cheaper Mideast oil,naphtha-trade
* U.S. light oil exports to Asia only started 4 months ago
* U.S. exports now going to Europe instead (Recasts)
By Florence Tan
SINGAPORE, Dec 1 (Reuters) - An aggressive strategy byMideast Gulf producers to exploit the lowest oil prices in fiveyears to defend market share is showing signs of bearing fruitas U.S. crude exports to Asia grind to halt.
Asian refineries have suspended imports of condensate, alight crude oil produced from the U.S. shale boom, just fourmonths after they began in favour of cheaper Middle East grades,according to trade and industry sources.
The suspension illustrates how competition between suppliershas heated up following a more than 40 percent decline in oilprices since June.
Last week Ali al-Naimi, the oil minister of OPEC kingpinSaudi Arabia, warned his fellow OPEC members they must combatthe U.S. shale boom. He argued against cutting OPEC productionso as to keep prices depressed and undermine the profitabilityof North American producers.
"There's so much oversupply that Middle East crudes are nowtrading at discounts and it is not economical to bring overcrudes from the U.S. anymore," said Tushar Tarun Bansal ofconsultancy FGE in Singapore.
U.S. oil became uncompetitive against similar grades fromQatar, Saudi Arabia and the United Arab Emirates after Gulfproducers began dropping prices in August to maintain theirmarket share in an oil market glut.
Crude oil prices have fallen more than 40 percent since Juneand the market tumbled further last week after OPEC, largelydictated by its Gulf members, decided at a meeting in Viennaagainst cutting output in order to support market share insteadof prices.
Middle East crude currently accounts for about two-thirds ofAsia's imports.
Adding to pressure on U.S. crude exports to Asia, freightrates from the United States to Asia have risen by 50 percent,forcing sellers to market their cargoes to Europe instead. Thisis partly due to higher demand for ships in the Middle East andAfrica.
40-YEAR BAN STALLS TO ASIA
The United States eased a 40-year-old ban on crude exportslast year in the wake of its shale oil boom, opening up newtrade routes for surplus flows to Asia and Europe this year.
U.S. exports of lightly processed condensate, also known aslight oil, started arriving in Asia in August and exportsdoubled to about 600,000 barrels in October.
Royal Dutch Shell bought the last cargo coming toAsia, due to arrive at its Singapore refinery in December, butas a result of the price shifts no more cargoes are expected tohead east for at least the next two months, three traders whospecialise in the market said.
The pressure could undermine plans to send further U.S.condensate to Asia. BHP Billiton Ltd and EnterpriseProducts Partners have both issued tenders to sellcondensate next year.
Trading house Vitol, which bought the latestU.S. condensate cargo to load in December, is likely to send itfor use at its Swiss refinery instead of Asia, trade sourcessaid.
Vitol does not comment on its trading activities and Shelldeclined to comment.
Although U.S. light crude exports to Asia may have stalledfor the moment, analysts say the new trade route is notnecessarily dead for good.
"OPEC could still act in 2015, especially if prices fall toofar (and) lower prices may spur non-OPEC exporters into action,"Morgan Stanley said in a research note.
"Lower prices may only force U.S. producers and servicecompanies to innovate even faster, pushing down the cost ofproduction," the U.S. bank added. (Editing by Henning Gloystein and Ed Davies)
