Saudi Arabia is significantly cutting its crude oil exports to the United States this month, with shipments likely to hit a 35-year low and reducing the overhang in U.S. oil inventories, Bloomberg reported, citing tanker-tracking data that it has compiled.
The drastic cut in Saudi crude oil exports to the U.S. is a radical shift from the Kingdom’s tactics from two months ago, when it sent a fleet of supertankers to flood the U.S. market with oil during the price war with Russia at the end of March and early April. Back in April, the tanker fleet from Saudi Arabia coincided with the massive oil demand loss and threatened to overflow U.S. storage capacity.
But after Saudi Arabia and Russia forged a new pact to cut a record amount of OPEC+ production to support oil prices, the Saudis now look intent to help reduce U.S. inventories by withholding supply to the U.S., the market which reports crude oil inventories every week.
According to tanker shipping data compiled by Bloomberg, in the first half of June, Saudi Arabia sent just one cargo of crude to the United States, equal to around 133,000 barrels per day (bpd). This compares to an estimated 1.3 million bpd of Saudi oil shipped to the United States in April. Related: Exxon Forced To Curtail Production In Guyana
Some Saudi tankers haven’t signaled their final destination yet, but if the pace of Saudi crude exports to the U.S. continues for the rest of June, they would hit the lowest in 35 years and help draw down some of the U.S. inventories which are sitting at above the five-year range because of the lost demand during the lockdowns.
Last week, the EIA reported a rise in U.S. crude oil inventories of 5.7 million barrels for the week to June 5 and an increase in fuel inventories.
At 538.1 million barrels, crude oil stocks were at a record high, and way above the five-year range for this time of the year. To compare, at this time last year, U.S. commercial crude inventories were 485.5 million barrels. U.S. gasoline demand averaged 7.9 million barrels per day in the week to June 5, up from 7.55 million bpd in the prior week, but still well below the 9.877-million-bpd demand for the same week a year ago, according to EIA data.
By Tsvetana Paraskova for Oilprice.com
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