US, WASHINGTON (ORDO NEWS) — Now, even 165,727 “professional investors” of the US oil exchange on the free, crash-prone Robin Hood platform have realized that the problem of global oil production is the lack of storage.
And even if this army of investors understands that there is no place to store physical oil in the continental United States, then Saudi Arabia, which created the current oil crisis and which will not stop until it destroys shale oil production, understands this for sure.
That is why, due to the fact that the United States cannot store its own oil, about 50 million barrels of Saudi oil are sent to the United States. They should arrive in the coming weeks, which will lead to even greater pressure on markets that are already trying to cope with an oversupply, reports Reuters.
More than 20 supertankers, each of which is capable of transporting 2 million barrels of oil, have headed to key US terminals, especially in the Gulf of Mexico. Three separate tankers, also chartered by Saudi Arabia, are anchored outside the ports of the United States Gulf of Mexico.
According to Reuters sources, the kingdom was trying to find storage options for tanker owners when the vessels were chartered last month. However, many refused, given the rate of storage filling.
As a result, hedge fund manager Kyle Bass tweeted that “the Saudis and Russians have declared war on American shale energy companies. It seems that they do not like American energy independence … The Saudis threw an oil bomb at us at 50 million barrels. How much more will oil prices fall in June? ”
Anger over the Saudi oil “bomb” has spread throughout Washington. US officials said Washington was considering blocking Saudi oil supplies or imposing tariffs on those supplies, which exacerbated the difficulties for cargo that is now on its way to the terminals.
In response, Saudi Arabia said it was considering whether it would be able to redirect shipments to other countries if the United States stopped importing.
Oil traders active in European and Asian markets say that the Saudis, of course, will try to redirect cargo to other markets in the event of a ban. This, in turn, will put enormous pressure on storage tanks in these two regions and lead to a fall in local oil grades.
“If the Saudis offer oil at low prices, buyers will buy it,” a source at an international trading company told Reuters. “Some still have free storage facilities, or they may agree to store oil for some time.” A source in Asia, an oil trading firm, said they expect large volumes of oil to be shipped to the US to go to the region if exports are blocked.
“It can be a very expensive event for Saudi Arabia, because no matter what the cargo is, tanker owners will have to pay for a simple one … However, despite the fact that this is an expensive game for the Saudis, stopping production would be an even more expensive event.” – noted the source.
Additional costs — or downtime charges — were $ 250,000 per day based on rates last month when many vessels were booked. Daily rates for tankers skyrocketed to nearly $ 300,000 last month. This week, they fell to $ 150 thousand, however, even this is a fairly significant amount in addition to other expenses, including insurance.
Even if the Saudi tankers get to the United States, it is not clear who will really need this cargo. The economy is stopped, demand is almost absent, especially, demand for gasoline, oil refineries have been absent in the US oil markets in recent days, slowing down the pace of refining, amid withering demand, sources in the oil market said. “Right now, few people are interested in new deliveries, since oil refineries in the USA do not have free space for oil storage,” another source said.
Marathon Petroleum, Exxon Mobil, Chevron and Phillips 66, the largest buyers of Saudi oil in the United States, remain silent.
According to Reuters, most major buyers of Saudi oil are located on the West Coast. According to the EIA, this region accounts for about half of all Saudi oil imports to the United States. As of April 10, the warehouse was 65% full; two weeks later, this number approached 100%. The Gulf Coast – the second largest place in the US for storing Saudi oil – is 55% full.
Saudi oil tankers will arrive in the United States at a time when the main US warehouse in Cushing will fill up in a few weeks.
On Monday, President Trump said he might stop Saudi shipments to the United States. Last week, US Assistant Secretary of Energy for Energy Frank Fannon said tariffs could be introduced.
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