US crude imports from KSA, Iraq may decline soon
Although crude oil exports from Saudi Arabia and Iraq increased in November and December, transit times result in delays before these shipments arrive in the United States
Recent market developments, such as OPEC’s output reduction and the recent widening of price differences between Dubai/Oman crude oil and US-produced Mars crude oil, suggest that US imports from Saudi Arabia and Iraq are now becoming less attractive to US refiners, according to EIA.
This is despite the fact that US crude oil imports from Saudi Arabia and Iraq, two of the United States’ main sources for imported crude oil, have risen since reaching relatively low points in 2014 and 2015. On a combined basis, crude oil imports from these countries are the highest since late 2012.
In late 2016, high production in Saudi Arabia and Iraq, as well as seasonally low internal demand in Saudi Arabia, contributed to record crude oil exports from Iraq and near-record exports from Saudi Arabia, according to data from the Joint Organisations Data Initiative (JODI). Saudi crude oil exports reached 8.3mn barrels per day (bpd) in November 2016, the highest level since May 2003, before declining to 8mn bpd in December. Saudi exports generally increase from August to November as seasonal declines in domestic consumption increase availability of crude oil for export.
In Iraq, exports reached a record high of nearly 4.1mn bpd in November 2016 and remained at that level in December. According to JODI data, Saudi and Iraqi production levels were relatively high prior to the pledged January 2017 production cuts, with December 2016 volumes up to 321,000 bpd and 700,000 bpd, respectively, from the previous year’s levels, creating an opportunity to increase exports.
Although crude oil exports from Saudi Arabia and Iraq increased in November and December, transit times result in delays before these shipments arrive in the United States. Given such transit times, cargos exported from Saudi Arabia and Iraq in November and December 2016 would be expected to arrive in the United States between December 2016 and February 2017.
Imports from Saudi Arabia into the United States increased for five consecutive weeks, rising from 1mn bpd for the week ending January 6 to 1.3mn bpd for the week ending February 10. Similarly, US imports from Iraq increased from 373,000 bpd for the week ending December 9, 2016, to 723,000 bpd for the week ending January 13, 2017.