"Why The U.S. Is Suddenly Buying A Lot More Saudi Oil"
From OilPrice:
For a few months now, OPEC has been boosting production to ease
concerns about high oil prices amid expected supply losses from
Venezuela and Iran.
The cartel’s largest producer and exporter,
Saudi Arabia, has been specifically targeting an increase in crude oil
exports to the most transparent market, the United States, which reports
crude oil imports and inventory levels every week.
On the one
hand, the Saudis are looking to regain their foothold in the American
market after having cut shipments to the United States to a 30-year-low
at the end of last year, when OPEC’s efforts to erase the global oil
glut were in full swing.
On the other hand, the Saudis are
responding to the demands of their staunch ally U.S. President Donald
Trump, who has repeatedly slammed OPEC for the high gasoline prices, urging the cartel in early July to “REDUCE PRICING NOW!”
In the week to August 31, the four-week average of U.S. crude oil imports from Saudi Arabia exceeded 1 million bpd for the first time since June 2017, data by the EIA showed.
At
that time last year, Saudi Arabia started to purposefully reduce its
exports to the United States, where inventory data and refinery runs are
reported every week. Those reports influence the price of oil and
investor sentiment.
In the last week of October 2017, the
four-week average of U.S. imports from Saudi Arabia was just 506,000
bpd—almost half of the four-week average of 1.009 million bpd for the
last week of August this year.
In October 2017, U.S. imports from Saudi Arabia stood at 582,000 bpd—the
lowest level since November 1987, as OPEC’s leader, its fellow OPEC
members, and Russia-led non-OPEC allies part of the production cut pact
were working to drain the global oil glut that weighed on oil prices and
on the incomes of oil producing countries.
In the spring of this year, it became evident that OPEC and friends
achieved their mission to draw global inventories down to the five-year
average. The oil market tightened, but OPEC’s leader Saudi Arabia was
still vowing to continue with the production cut pact at least until the
end of this year.
However, the U.S. announced the return of
sanctions on Iran, including on its oil, Venezuela’s production
continued to plunge by around 40,000 bpd-50,000 bpd every month, outages
in Libya and Nigeria continued, and Brent Crude prices hit $80 a barrel in May.
Consumers
and large oil-importing nations started to express concern about the
high oil prices, and analysts started to question whether $80 oil was
the beginning of demand destruction. President Trump stormed into the
debate with several tweets aimed at OPEC and its price-fixing policies.
After
OPEC and its allies decided in June that they would ease compliance
rates, that is, boost production, U.S. imports from Saudi Arabia started
to rise again, exceeding 1 million bpd at the end of last month. That
has come at the expense of another Middle Eastern oil supplier, Iraq,
whose crude oil exports to the United States have been dropping from the highs of more than 800,000 bpd in April this year, to less than a 400,000 bpd four-week average as of August 31...MORE, including a couple related posts.