Saudi Arabia’s crude oil exports to U.S. are falling sharply, with shipments so far this month at just 1.6 million barrels, according to data compiled by Bloomberg, versus 5.75 million barrels a year ago.
For the whole of January, Saudi Arabia exported just 2.69 million barrels of crude to the United States. The decline follows Saudi Arabia’s decision to cut its crude oil production—primarily heavy crude grades—by more than it agreed to at the December OPEC+ meeting as it seeks higher oil prices.
One analyst told Bloomberg oil exports from the Kingdom to U.S. refiners could even fall to zero but that was unlikely to happen.
"We could see Saudi oil imports declining to zero into the U.S. Gulf Coast,” Andy Lipow from Lipow Oil Associates said. “OPEC and non-OPEC members feel prices are too low, and they will do what it takes to put the market back in balance."
Yet refiners from the U.S. West Coast have a limited choice of suppliers, so some Saudi oil will continue going there, at least.
While shipments to the United States fall, however, the amount of Saudi oil going to China will increase this year, Reuters reported earlier this week, citing an unnamed source in the know.
Last year, Saudi shipments of crude to China averaged 1 million bpd but this year this may rise to 1.5 million bpd by the end of the first quarter as the Saudis aggressively seek a larger market share in the world’s second-largest oil consumer, which, unlike the United States, has not got abundant local production and has to rely on imports to satisfy demand.
Total Saudi oil exports next month are slated to fall further to 7 million bpd, with production cuts by the Kingdom at half a million barrels daily more than their quota, seen at 9.8 million bpd next month.
By Irina Slav for Oilprice.com
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