Record Saudi Flows vs Tariff Woes

Record Saudi Flows vs Tariff Woes image

Record Saudi Flows vs Tariff Woes

04/06/2020 | Author: Matt Smith

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I was on CNBC Asia last night, discussing the potential for a synchronized production cut – or the prospects of US oil tariffs – amid rampant Saudi crude loadings in recent weeks.

We discussed whether the threat of US tariffs on oil imports were more ‘bark than bite’ – and it does indeed seem that they would be lacking in teeth even if they were implemented, given how dramatically US oil imports have dropped off in recent years.

If the US were to put tariffs on flows from the Persian Gulf, this would apply to around 750,000 bpd of imports. Although still a big number, this is about a third of what it was just a few years ago. The US has become increasingly reliant on Canadian barrels, while waterborne imports have dropped. The US now relies on Canada for about 40% of its imports.

The chart below also addresses a point we discussed in the interview (hark, clip below). Former Energy Secretary Rick Perry is suggesting that the US blocks Saudi oil reaching the largest refinery in the US – Motiva’s Port Arthur refinery – which is owned by Saudi Aramco.

But as the chart illustrates, while Motiva may be the leading US destination for Saudi crude, it is only pulling in about 100,000 bpd. This could easily be replaced with barrels from elsewhere.

All this said, the US is set to see higher flows of Saudi crude next month, as the OPEC kingpin has opened the spigots, increasing flows heading west. As the chart below illustrates, Saudi loaded about 10.5 million barrels per day last week, the highest weekly loading on our records.

It was great to catch up with the mighty Dan Murphy, he’s been based in Dubai for a while, and I’ve missed our banter. Hark, click on the below mugshot to launch to part of the interview.


About The Author

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Matt is a Director of Commodity Research at ClipperData. Matt specializes in extracting key themes from technical and fundamental analysis of the global energy market, and communicating these through daily and weekly deliverables. He also provides oil and natural gas analysis and commentary to national and international media outlets that include CNBC, Fox Business, Russia 24, the Wall Street Journal, MarketWatch, AFP, Bloomberg, Reuters, and the Oil Daily. Prior to joining ClipperData, he worked for eight years at Schneider Electric / Summit Energy as a Global Commodity Analyst, where he also founded and authored the blog, Energy Burrito. He started his career at the Royal Bank of Canada in the UK, spending eight years with the bank. During that time, he managed $55 million in assets as a portfolio manager and financial analyst.