• 8 minutes U.S. Shale Oil Debt: Deep the Denial
  • 13 minutes WTI @ $75.75, headed for $64 - 67
  • 16 minutes Trump vs. MbS
  • 2 hours Despite pressure about Khashoggi's Murder: Saudi Arabia Reassures On Oil Supply, Says Will Meet Demand
  • 24 mins Dyson Will Build Its Electric Cars in Singapore
  • 12 hours Knoema: Crude Oil Price Forecast: 2018, 2019 and Long Term to 2030
  • 16 hours Iraq war and Possible Lies
  • 2 hours Satellite Moons to Replace Streetlamps?!
  • 2 hours Can “Renewables” Dent the World’s need for Electricity?
  • 13 hours EU to Splash Billions on Battery Factories
  • 19 hours A $2 Trillion Saudi Aramco IPO Keeps Getting Less Realistic
  • 12 hours Get on Those Bicycles to Save the World
  • 7 hours Merkel Aims To Ward Off Diesel Car Ban In Germany
  • 2 hours Aramco to Become Major Player in LNG?
  • 24 mins How Long Until We Have Working Nuclear Fusion Reactor?
  • 3 hours Why I Think Natural Gas is the Logical Future of Energy
Alt Text

The Oil Markets Are At A Confusing Crossroads

The latest IEA report suggests…

Alt Text

This Alliance Could Mark A New Era For Oil

A formalized oil alliance between…

Matt Smith

Matt Smith

Taking a voyage across the world of energy with ClipperData’s Director of Commodity Research. Follow on Twitter @ClipperData, @mattvsmith01

More Info

Trending Discussions

Iraq Seizes Saudi Share In U.S. Oil Market

Wowee, 1985 showed a rich vein of form for movies. It was the year that spawned The Goonies, The Breakfast Club, Spies Like Us, Fletch and Back to the Future. It is Michael J Fox's breakthrough movie as Marty McFly which is particularly appropriate this month, given an event that is unfolding in the oil market which has not occurred in the last 32 years. 

EIA monthly import data goes back to the beginning of 1973 (when Carly Simon was at number one with 'You're So Vain'). Over the last forty-four years, Iraqi crude imports to the U.S. have only outpaced Saudi Arabian volumes on one occasion. And that was over a five-month period in... yep...1985.

Ironically, just as Tears For Fears were just about to settle themselves into the number one spot on the Billboard 100 with 'Everybody Wants to Rule the World', Iraqi flows into the U.S. surpassed those of Saudi Arabia in May of 1985. They maintained the upper hand for five consecutive months, before relinquishing supremacy back to Saudi Arabia. The kingdom has delivered more crude to the U.S. over the last +500 months. That is, until now. 

(Click to enlarge)

The reason that Iraqi flows to the U.S. were able to surpass those of Saudi Arabia in 1985 is twofold: Saudi Arabia dramatically slashed its production in the early 1980s, lowering its oil output from 10 million barrels per day in 1981 to around 3.5 million bpd in 1985, as demand for its crude dried up and it took steps to support prices. At the same time, Iraq was ramping up its output, oblivious to OPEC's efforts to cut production (sounds strangely familiar...).   

But come September 1985 (when Dire Straits were #1 with 'Money For Nothing'), Saudi Arabia finally got fed up of carrying the burden of OPEC production cuts while other members of the cartel continued to produce with reckless abandon (still sounds strangely familiar).

Related: Which Of These 3 Hotspots Will Be The Next Big Thing In Oil?

This marked a sea change in Saudi's strategy, and they subsequently ramped up production. Although Iraq's exports to the U.S. continued to rise through the rest of the decade, they abruptly dropped to zero with the onset of the Gulf War in 1990, and have remained adrift of Saudi volumes for the past few decades.

Thirty-two years on from Doc Brown and his time-traveling DeLorean, and thirty-two years on since Iraqi flows to the U.S. surpassed those from Saudi, we are about to take a trip back to the future. Again, the issue is twofold: Saudi crude flows to the U.S. have been dropping considerably in recent months (discussed on CNBC this week here), as Saudi has made a conscious effort to reduce flows to the largest and most transparent global market - as it aims to get the most bang for its buck from cutting exports.

At the same time, crude flows from the southern Iraqi port of Basra have shown little (well, no) impact from the OPEC production cut deal, with export volumes continuing to flow as usual. As Saudi deliveries drop, and as the U.S. leans increasingly on Iraqi barrels - ironically, to likely replace lower Saudi flows - Iraqi barrels are gaining the ascendancy once again. 

(Click to enlarge) 

By Matt Smith

More Top Reads From Oilprice.com:




Back to homepage

Trending Discussions


Leave a comment
  • Herve Villachez on October 26 2017 said:
    Iraq is about as stable as Andy Dick. The only reason it is able to export oil is the US military presence. The Middle East is on the brink of collapse and investing in the region is would be as safe as having Bill Cosby as a bar tender.
  • Bond, James on November 07 2017 said:
    US is getting very desperate. China and Russia are on the rise and US is being squeezed
    on all fronts. US continues to steel Iraqi and Syrian oil and violating those countries
    sovereignty.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News