Storm Before The Storm: US Saudi Imports Plumb 29-Year Low

Latest US data show imports of just 774,000 b/d from Saudi Arabia over the four weeks to 25 August. At 843,000 b/d for the past three months this is the lowest for any comparable period since 1988. Disruptions over the past week due to Hurricane Harvey mean final August volumes were likely lower still.

Harvey has also knocked around 300,000 b/d off US output both from the Gulf of Mexico and the 1.35mn b/d Eagle Ford shale formation of southern Texas.

Chinese imports from Saudi Arabia also remain low at just 940,000 b/d for July, level with June and down 230,000 b/d on Q1, when arrivals were boosted by an end-2016 output spurt. The effect of the Opec-deal cuts is being exacerbated by a summer rise in oil burning: though Saudi crude burn is down year-on-year, fuel oil burning is up by the same amount (MEES, 18 August), meaning that crude exports are crimped all the same.

Saudi Q2 Chinese market share, at 11.3%, was the lowest on record. Adding insult to injury, the three key countries to have gained at Saudi expense – Russia (now clear number one at 1.18mn b/d for January-July 2017), Angola (at 1.06mn b/d, a fraction ahead of Saudi), and Iraq, are all party to the Opec/non-Opec deal. Iraqi shipments to China rose again in July, to 858,000 b /d, just 80,000 b/d below Saudi volumes. Iraq has been gaining market share in all its key export markets (MEES, 4 August), figures that fly in the face of official claims to have cut output (MEES, 4 August).

Chinese imports from the Americas are also sharply up. China’s last four months of import data (April-July) show an average of 204,000 b/d from the US, up from just 10,000 b/d for 2016 and virtually nothing before that.

However, Japanese imports from Saudi Arabia rebounded strongly to 1.34mn b/d in July from 979,000 b/d in June. Saudi Arabia has focussed this year’s output cuts on fields producing its heavier crude grades: volumes of higher-value light crude to number one market Japan are up sharply (see chart).

Iran’s shipments to Asia have, like those of Saudi Arabia, eased in recent months. However this is not the full picture. European import data indicate a rise in Iranian volume. Turkey took 277,000 b/d from Iran in Q2, the highest quarterly figure on record and more than double year-ago figures (see data, p4), and Italy a six-year high of 274,000 b/d in June (MEES, 11 August).

Land Of The Rising Api: Saudi Focuses Crude Exports On Light Grades And On Japan, Its #1 Market (Japan Imports From Saudi Arabia, '000 B/D)