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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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U.S. Ban On Saudi Oil Could Force Riyadh To Reroute 40 Million Barrels

Oil tankers

Saudi Arabia may be forced to reroute tankers carrying some 40 million barrels of crude oil to the United States if President Trump goes through with a threat to ban imports, Reuters has reported, citing shipping data and unnamed sources.

There have been reports that Washington is discussing a ban on Saudi imports of crude oil or impose tariffs to stem the decline in U.S. oil prices. When President Trump first floated the idea of oil import tariffs, it was taken as a threat to large oil exporters to the U.S. such as Saudi Arabia to finally reach an output cut agreement with their partners in OPEC+. Now, the stakes are higher.

According to Reuters’ sources, Saudi Arabia had first tried to seek storage options for the oil now at sea. Many tanker owners, however, were unwilling to agree to such a change in plans as it would have meant stranding tankers, with the prospects of finding a buyer quickly grim.

Aramco “offers its larger customers with refineries in multiple regions of the world optionality to take their crude purchases from Aramco into the region,” the company told Reuters in a statement. “Changes in ship destinations are routine in the course of our business, particularly in a company of our scale.”

Meanwhile, the Wall Street Journal reported earlier this week that at least one in every ten Very Large Crude Carriers capable of holding up to 2 million barrels of oil is now serving as floating storage, with many of them full of unsold Saudi oil.

Last week, The Wall Street Journal reported that the volume of Saudi crude en route to the United States was seven times higher than the typical monthly intake of Saudi oil in 2019. These vessels, however, were loaded before OPEC+ struck the deal to cut 9.7 million bpd from its collective output beginning in May.

By Irina Slav for Oilprice.com

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Leave a comment
  • William Pittman on April 23 2020 said:
    Even without Presidential ban, couldn't the TX and LA governors ban unloading the Saudi crude at their ports? Same with other oil producing states with ports where imported oil is unloaded.
  • Norm Dill on April 24 2020 said:
    Trump has proved to be particularly vulnerable to Saudi manipulation. I doubt he will follow through, I doubt he intends to follow through. He is being a big backer of Saudi Arabia from the start. That's the relationship that is far more suspicious than anything to do with Russia ever was.

    I guess there's the possibility of tariffs if the price stays too low or if the Saudis engage in a price war again, but that's a 50/50 bed at best I think. Trump is very soft on the Saudis.
  • blue charm on April 25 2020 said:
    The OPEC+ production cuts will clearly not be sufficient to balance the market in the face of such historic demand destruction.
  • ema chris on April 25 2020 said:
    shale producers have a relatively high cost base, many of them also high leverage. Allowing too many bankruptcies in this space would have a devastating effect on some of their lenders.

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