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Saudi Arabia's Oil Export to US Plunges to 30-Year Low
Saudi Arabia's Oil Export to US Plunges to 30-Year Low

Saudi Arabia's Oil Export to US Plunges to 30-Year Low

Saudi Arabia's Oil Export to US Plunges to 30-Year Low

For a generation, the huge, whitewashed storage tanks at America’s largest oil refinery in Port Arthur, Texas, have stored almost nothing but Saudi crude. All of a sudden, there are very few Saudi ships arriving in Texas.
Since July, Saudi Arabia’s state-run oil company, Aramco, has constricted supply, attempting to drain the US crude storage tanks, as part of a plan to lift oil prices, even at the cost of sacrificing its once prized US market, Bloomberg reported.
While its Motiva Refinery in Texas is most affected, the rest of the US oil refining system, from El Segundo in California to Lake Charles in Louisiana, has also taken a hit. The result: Saudi crude exports into America fell to a 30-year low last month.
"The drop is huge," said Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. in London. "It’s not just that Saudi exports are low, but they have been low for several months.”
The US imported just 525,000 barrels a day of Saudi crude in October, the lowest since May 1987 and down from 1.5 million barrels a day a decade ago, according to Bloomberg News calculations based on custom data.
The export drop was part of a wider undertaking by the Organization of Petroleum Exporting Countries to fight a global glut that has weighed on oil prices. OPEC and its non-OPEC allies, including Russia, are scheduled to meet later this month to discuss prolonging the cuts through 2018.
Saudi Arabia, which for decades fought hard to be the second-largest oil supplier to the US after Canada, last month dropped to fourth position for the first time since at least 1990, falling behind Iraq and Mexico.
The drop in supplies has been so dramatic that Motiva bought in July almost the same amount of crude from Saudi Arabia (4.01 million barrels) as it did from Iraq (3.96 million), according to custom data.
Saudi crude that month accounted for just 36% of Motiva’s imports, down from a typical 70-90% in the past. In August, the most recent monthly data available at company level, Saudi crude accounted for less than half of Motiva’s imports.
Saudi officials said oil exports are set to drop even further in this month and next, with shipments into the US expected to fall another 10% from November.
"Saudi Arabia doesn’t care anymore about its market share in the US -- it’s going after the Asian market," said Jan Stuart, an oil economist at consultant Cornerstone Macro LLC in New York.

 

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