Baku, Azerbaijan, Feb.22
By Leman Zeynalova – Trend:
Given the scale of current output, developments in the US can now influence prices too, the UK-based Capital Economics consulting company believes.
But, according to the consulting company, the oil price is still determined at the global level and the US has to pay international prices for its oil imports, Trend reports.
“Ten-to-twenty years ago, oil production in the US appeared to be in terminal decline, raising concerns about where it would source its rising import needs. However, soaring oil prices prompted a renaissance in the US shale oil industry. Indeed, the US became the world’s largest single oil producer in 2018. As a result, US oil imports from Saudi Arabia peaked in 2003 and have been in steady decline since, although they ticked up a little last year,” reads an analysis of Capital Economics.
That said, the Kingdom is still the second largest source of US imports after Canada, said the company.
“Part of the reason that US imports have remained relatively high is because Saudi Arabia owns the largest refinery in the US (Motiva in Texas). Another reason is that some US refineries need the heavier type of crude produced by Saudi Arabia (as well as Canada and Venezuela) to blend with the light, sweet US oil.”
The slump in US imports has, instead, fallen heavily on producers of light oil, such as Nigeria, reads the analysis.
“Of course, the oil market is fungible and the US would always be able to find other sources of heavier oil. What’s more, there is some mutual dependence. The US was still Saudi Arabia’s fourth largest market in 2018, behind China, Japan and India. The bigger picture, though, is that security of oil supplies has become a much less important factor in US relations with Saudi Arabia.”
Follow the author on Twitter: @Lyaman_Zeyn