Saudi crude exports drop to key regionsTags: Iraq crude exports, OPEC crude exports, Saudi Arabia
Saudi Arabia continues to lead the charge in terms of the OPEC production cut deal – not only by keeping exports in check, but also by clearly communicating its next steps. By following through on its rhetoric, it has brought some much-needed credibility to the production cut deal – despite a lack of commitment from some other members.
These efforts by Saudi Arabia can be clearly seen in U.S. crude imports of OPEC crude. Deliveries in July dropped below year-ago levels for the first time since late 2015, and absolute volumes have continued to drop in the two months since. Part of this drop relates to hurricane activity on the US Gulf Coast reining in refinery operations…but some is a conscious effort:
Much of this descent has been led by Saudi Arabia, whose deliveries averaged just over 700,000 bpd in Q3, after averaging 1.1 million bpd in Q2, and nearly 1.3mn bpd in Q1. Iraqi crude arrivals peaked in Q2 at nearly 700,000 bpd, but dropped last quarter. Nonetheless, Iraqi crude flows to the US so far this year are still up over 40 percent versus year-ago levels.
As refining activity on the US Gulf Coast gradually returns to normal after hurricanes Harvey and Nate, Iraqi flows are set to see a return to form, Saudi less so.
As Saudi Arabia dials back its crude exports, flows have dropped to various key demand regions, not just the U.S. We can see in our ClipperData that Saudi flows into China have also dropped. Countering this drop, we have seen an increase in deliveries from all manner of places, from West Africa to Latin America. But we have also seen an increase from Saudi’s cartel comrades, Iran and Iraq.
Iran is not part of the OPEC production cut deal, hence is under no obligation to curtail its output. As for Iraq, it seemingly carries on regardless: footloose and fancy free.
About The Author
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.