Saudi oil flotilla threatens US economy

US, WASHINGTON (ORDO NEWS) — Saudi Arabia plans to supply about 600,000 barrels of oil per day to the United States by the end of the month. Due to low demand for raw materials, these supplies pose a threat to the country’s economy, and US politicians urge that Saudi tankers not be unloaded.

Saudi Arabia has scheduled for April the delivery of approximately 600,000 barrels of oil to the United States in the United States – this is the maximum volume for the year, a source in the kingdom’s oil industry told Bloomberg. The “flotilla” of Saudi tankers heading for the US coast of the Gulf of Mexico threatens to worsen an already difficult situation with oversupply on the market, The Wall Street Journal emphasizes.

The tankers were loaded in March and early April, when Saudi Arabia was increasing supplies as part of a price war in order to increase its share in key markets, said WSJ. However, later the kingdom concluded the largest deal to reduce production with Russia and other OPEC + countries in history. After that, the Saudi state-owned company Saudi Aramco announced that in May it will reduce production to 8.5 million barrels per day. The company has already reduced the size of discounts offered to importers, and some oil refineries are likely to reduce the volume of orders, Bloomberg said.

However, 20 tankers carrying a total of 40 million barrels of oil are already heading to US ports and will arrive there in late May, WSJ writes citing data from Vortexa and Kpler. Oil supplies from Saudi Arabia will be seven times the volume of those that usually came from the kingdom through the Gulf of Mexico last year, the newspaper said. This oil will go to American oil storage facilities that are filling so fast, hit already low prices for shale oil and increase pressure on American oil companies, the newspaper writes.

“Do not let them unload”

“We know that ships are approaching, and yet no one is doing anything about it,” complained Kirk Edwards, president of the Latigo Petroleum oil company, in a conversation with WSJ. He compared what was happening with the attack on Pearl Harbor during World War II. “A very sharp short-term strike awaits us,” said Mark Papa, former head of EOG Resources, a newspaper.

The situation has attracted the attention of American politicians, some of whom are urging the White House to consider introducing an embargo or other measures to halt supplies, WSJ notes. “Do not let them unload on American soil <…> The kingdom cannot flood the market and expect us to rectify the situation,” Republican Senator Kevin Kremer wrote on Twitter to US President Donald Trump.

Last week, US oil reserves rose to 19.2 million barrels, WSJ indicates with reference to the US Department of Energy. At the same time, the price of US WTI oil fell to a 21-year low on Friday , and OPEC countries said they expect raw material demand to drop to a minimum in 30 years. Statistics on China also had an impact on demand – the country’s GDP for the first three months of the year fell by almost 7%.

Saudi Aramco declined to comment on WSJ.


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