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Title : Crude Oil Imports And Saudi Arabia -- August 15, 2018
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Crude Oil Imports And Saudi Arabia -- August 15, 2018

This is a blurb I posted earlier following the release of the weekly petroleum report today. 

Imports? up a huge amount -- up by over one million bbls -- total imports right at 9.0 million bbls -- I haven't seen an increase this big in quite some time; what gives?

Quick: how much oil does the US produce? Somewhere between 10 and 11 million bopd.

So, the US is importing almost as much heavy oil as the amount of light oil that we are producing.

• over the past four weeks, crude oil imports averaged about 8.1 million bopd, almost 1% more than the same four-week period last year; why? 
• why? of course, the report doesn't say why, but this is what I think is going on -- US refineries are optimized for heavy oil; the US produces almost exclusively light oil (how did this happen? President Obama can tell you, but I digress); 
• the refineries are operating at 98.1% capacity; that's a lot of oil -- a lot of light oil, but they need heavy oil to balance out the barbell -- the mix of heavy oil / light oil that the refineries-optimized-for-heavy-oil can actually refine
• there are reports that we are back to exporting "record" amounts of oil from Saudi Arabia; why? we need their heavy oil, now that we can't get enough heavy oil from Canada (Keystone XL killed by President Obama); Venezuela is imploding
• irony: President Obama's staff favored Iran; hated Saudi Arabia; tried to change the balance of power in the Mideast -- Saudi Arabia vs Iran; not only does Trump put the original sanctions back on Iran, but due to the aborted Keystone XL, Saudi Arabia comes back the winner -- and in an era of "lower prices longer," Saudi Arabia needs all the markets it can get

Anyway, that's my two cents worth. That and fifty cents will get you a senior cup of coffee.

By the way, this might also explain the huge growth in US crude oil inventories. The refineries are operating at 98.1% capacity but they don't need more light oil from the Permian or the Eagle Ford or the Bakken; they need more heavy oil overseas.

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