Weekly U.S. crude oil imports from Saudi Arabia have fallen sharply since early June.Data published last week by the U.S. Energy Information Administration show that imports from Saudi Arabia in the week to July 14 fell to their lowest for seven years: just 524,000 barrels a day. For sure, one week’s number doesn’t mean much on its own, particularly when a single very large crude tanker could raise or lower that figure by half.
But this isn’t an isolated figure. The EIA data show a clear drop in deliveries from Saudi Arabia since the start of June. The average rate of U.S. imports from the desert kingdom over the past six weeks has dropped by 450,000 barrels a day, or 34 percent, compared with the first six weeks of the year
Given that it averages six weeks for a tanker full of crude to travel from the Persian Gulf to the U.S., this drop in imports reflects a slowdown in Saudi shipments that began in mid-April, which shows up in Bloomberg tanker tracking data for the Kingdom. So Saudi Arabia is finally slashing exports to the U.S., even as shipments to other destinations — with less visible inventories — have been maintained, or even risen.
This is crucial, because the failure to drain U.S. storage tanks has been a major factor in driving down oil prices. “Exports to the U.S. will drop measurably,” Saudi oil minister Khalid Al-Falih said in May. The kingdom is now making good on that promise.
Preliminary tanker data must be treated carefully, though. Several ships show no final destination and could still end up in the U.S. Saudi crude usually moves across oceans in 1 million or 2 million barrel shipments, which means a pickup in flows to the U.S. at the end of July could change the picture dramatically.
Anyway, one has to ask whether Riyadh’s new resolve is too late as the OPEC-brokered deal to remove about 1.8 million barrels a day from the world’s supply is looking a little shakier. In June, OPEC members’ compliance with their agreed cuts fell to its lowest level since the deal came into effect (although 95 percent is still pretty good).
Better non-OPEC compliance in June made up for the worst performance by OPEC members