Is the US justified in their confidence?
This week on News Stream, we look at the recent Saudi Arabian cuts to US fuel supply – and the effects this could have on crude prices and the other OPEC nations’ future plans.
The full transcript of this week’s episode of News Stream is available below.
Saudi Arabia has recently reduced its crude supply to the US by more than 50 percent when compared to February 2018. Despite the Gulf Coast being the world’s most important area for refining, it is expected that the Saudi supply may dwindle away completely in the next six months or so.
Nevertheless, oil prices have continued to rise by over two percent amid the supply cuts, and despite the Trump Administration’s plea for OPEC to reduce its oil production restrictions. The Saudi Energy Minister responded to the US president by saying that OPEC were far from worried in the wake of Trump’s comments, saying:
“We are taking it easy. The 25 countries are taking a very slow and measured approach. Just as the second half of last year proved, we are interested in market stability first and foremost”
As the largest crude oil producer in the Middle East, Saudi Arabia is setting a good example to other OPEC members who recently pledged to reduce their output. US stockpiles have fallen by 8.6 million barrels in the past couple of weeks, four times more than originally predicted by Reuters. This has been offset somewhat by increased production within the US itself (up to a record 12.1 million barrels per day), and increased crude exports of 3.4 million bpd.
Saudi Aramco has shipped only 1.6 million barrels to the US Gulf this February, compared with nearly 6 million last year. As the world’s focus shifts now to the ongoing tensions between Pakistan and India, let’s all keep our ears to the ground on this developing US-OPEC standoff.
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