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Saudi crude oil shipments to U.S. plunge to zero
Decline followed disruptions to Persian Gulf oil flows tied to the U.S.-Iran war
(Joe Raedle/Getty Images North America via Bloomberg)
Key Takeaways:
- U.S. imports of Saudi crude fell to zero in July, marking the first full month without Saudi oil deliveries since 1985, according to preliminary government data.
- The decline followed disruptions to Persian Gulf oil flows tied to the U.S.-Iran conflict, prompting refiners to replace Saudi barrels with supplies from sources including Venezuela.
- Saudi shipments to the U.S. may rebound to about 300,000 barrels a day this month, according to Kpler forecasts, after months of trade disruptions.
U.S. imports of Saudi Arabian oil dropped to zero in July, the first time that has happened for an entire month since 1985, according to preliminary government data.
Saudi oil exports have been disrupted for months as the U.S.-Iran conflict all but shut down Persian Gulf crude flows. Last month, U.S.-bound shipments of the kingdom’s crude ground to a halt, according to U.S. Department of Energy data released Aug. 5. It’s a significant decline given that U.S.refiners were buying more than 800,000 barrels of Saudi oil a day earlier this year.
READ MORE: Saudis cut key oil price again as Hormuz talks progress
U.S. refiners have been seeking replacements for Saudi cargoes as the closure of the Strait of Hormuz and other war-related disruptions sent prices for barrels linked to the global benchmark soaring.
Phillips 66 reduced the proportion of Middle Eastern crudes flowing into its plants to less than 1%, CEO Mark Lashier said Aug. 5. The company has been sending light crude from U.S. fields to its New Jersey refinery to replace some foreign grades.
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Other U.S. refiners that historically have been heavy users of Saudi oil include Chevron Corp. and PBF Energy Inc. Motiva Enterprises, which owns the nation’s largest refinery in Port Arthur, Texas, is wholly owned by the Saudi state oil company and in normal times processes Mideast oil.
Venezuela has been a big winner in the pivot away from Saudi crude. American refiners imported around 600,000 barrels of the Latin American country’s crude in July, up from roughly 100,000 at the start of the year.
There have been occasional weeks when Saudi deliveries to the U.S. dropped to zero but July was the first time they bottomed out for a full month in more than 40 years. To be sure, the drop may be temporary. U.S. imports of crude from Saudi Arabia are forecast to rebound this month to about 300,000 barrels a day, in line with recent historic norms, according to Kpler data.
