In a trend set to grow in coming months, Saudi Arabia's efforts to reduce a worldwide crude supply glut by cutting shipments to the United States has other countries, notably Iraq filling in. US imports of crude from Iraq rose by 41 per cent from a year ago, over the summer, meanwhile similar shipments from Saudi Arabia have dropped by 22 per cent.
The trend has steadied, proving that Saudi's role in reducing world supply is also costing it market share in the world's largest oil consumer. Imports to the US have also increased from OPEC members Iraq and Nigeria, along with Canada, and refiners are relying more on rising US shale production. Sandy Fielden, director of research, commodities and energy at Morningstar, said, “For every barrel (the Saudis) don't produce they're losing market share. Refiners go to an alternate in that situation and obviously the Iraqis took advantage.”
Saudi cut shipments to the US since June, as part of an ongoing effort by the Organisation of Petroleum Exporting Countries to cut supply. The group along with non-member nations like Russia, agreed in late 2016 to cut world output by 1.8 million barrels a day. Data provided by the US Energy Information Administration states that between June and August this year, Iraq exported an average of 600,000 barrels of oil daily to the United States, compared with 426,600 bpd a year ago. Shipments from Saudi dropped to an average of 850,000 a day from 1.09 million bpd last year.
Saudi “cut imports to Motiva, while they cut less to the others,” Fareed Mohamedi, chief economist at Maryland-based Rapidan Energy Group, said. “They're willing to sacrifice to themselves, but their refinery went out to buy other crude which also helped tighten up the market.”
In addition, US production has risen by 430,000 bpd this year through August, EIA data shows. Fielden said while the shale threat means OPEC will extend production cuts, the shipping figures suggest disagreement on supply to the United States. "This example between Iraq and Saudi is, I think, destined to be an ongoing situation," he said. "In a situation where some of the members of OPEC are not exactly best friends, that complicates amicable agreements about market share."
