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Shale Is Reshaping America's Oil Trade Balance
h/t InstapunditAmerica’s crude trade balance is changing. On the import front, the decision by petrostates to cut production (with the intention of erasing a global oil glut to help induce a price rebound) is expected to reduce the amount of oil the U.S. buys from Saudi Arabia and Iraq. Those OPEC members have been constraining output since the beginning of the year, but because it takes roughly six weeks to ship crude from the Middle East to the Americas, we haven’t yet started to see a reduction in supplies from the region. Now, however, analysts are expecting Saudi and Iraqi imports to start declining as those cuts start to make American oil more attractive to U.S. refiners than their Middle East competitors. The EIA explains: [R]ecent market developments, including the November 2016 agreement among certain members of the Organization of the Petroleum Exporting Countries (OPEC) to reduce production and the recent widening of price differences between Dubai/Oman crude oil and U.S.-produced Mars crude oil, suggest that U.S. imports from Saudi Arabia and Iraq are now becoming less attractive to U.S. refiners. [...] After OPEC announced crude oil production cuts in late November 2016, the relative price of Dubai/Oman crude oil rose because the supply reductions pledged by Middle East producers disproportionately affected medium, sour crudes. In January 2017, the price premium of Dubai/Oman over Mars reached its highest level in more than a year, likely encouraging U.S. refiners to process more domestic medium, sour barrels while reducing imports of comparable grades from the Middle East. Of course, U.S. oil production has a pivotal role to play in all of this. The shale revolution was the chief reason behind the market oversupply that necessitated these petrostate cuts in the first place, and our rising oil output isn’t just changing how we’re buying crude, it’s also changing how we’re selling it. As Bloomberg reports, our exports are surging to a 24-year high: Posted by: g(r)omgoru 2017-02-26 |
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