An armada of Saudi Arabian crude oil-filled tankers threatens to stop the US oil supply from drying out, which is only the beginning.
According to the data tracking ship compiled by Bloomberg, more than 30 ships are scheduled to arrive on the US Gulf Coast and West Coast during May and June. More than 50 million barrels of Saudi crude on the water threaten to maintain a positive supply growth: US crude stockpiles declined for the first time since January and contracted most in inventory months at the Cushing, Oklahoma storage hub.
The US is facing a tsunami of Saudi oil due to the impact of a price war between Riyadh and Russia in March - causing the Middle East nation to take its grade pricing to multi-year lows and flood the market. The supply wave occurred even as the Covid-19 epidemic rapidly weighed in on petroleum demand. A fifth of global consumption still seems to be disappearing this quarter.
'Expected Saudi deliveries may push back American inventions based on their time," said Sandy Fielden, director of oil and products research at Morningstar Inc. 'If the oil imports land at a rate that isn't counteracted by the decrease in production or an uptick in exports, then we'll see a domestic excessive build up of oil.'
The oil industry has for months tested with onshore and offshore storage capacity levels that have been tested worldwide due to the oil invention caused by the demand slowdown. On the American West Coast, crude stockpiles are less than 5 million barrels to reach the region's storage capacity.
While data from the Energy Information Administration this week showed that US crude oil production fell to its lowest in nearly a year, still being produced in quantities that could lead to new Saudi deliveries for storage space Huh.
'On the off chance that every single Saudi big hauler empty, the crude oil they have stored will decrease in production from March levels, viably keeping up the present high stockpiling fill rate.,' a senior oil market analyst at Rostad Energy Paola Rodriguez-Masiu says. A note states.
Very large crude carriages or VLCCs are prominent for the US Gulf, including Shaiba, Hong Kong Spirit, and Dalma, ship-tracking data show. Pacific Coast tankers include CZ and Casino I. The ships, mainly supertankers, will deliver more than 45 million barrels to Gulf buyers and at least 7 million to Pacific users. The amount of oil arriving in May and June is equal to about a third of all Saudi crude delivered to the US last year.
As a result of increased shipments, delays in Saudi oil discharge have become common. For some ships, it has taken about two weeks to unload cargo, almost twice the normal time to finish work as the smaller vessels needed to unload have rapidly decreased.
So far this year, weekly Saudi crude imports exceeded 600,000 barrels a day in March. Shipments had been steadily declining since late 2018 in response to agreements made with OPEC and its partners.
While West Coast crude stockpiles are currently at 58.2 million barrels, near the full capacity, the inventory picture on the US Gulf Coast of the US refining belt is sharp. 88 million barrels shy of inventions reaching the total storage capacity of raw materials.
Oil imports from Saudi Arabia are not planned to stop anytime soon, even though the country increased its production cuts and raised prices for imports in June, with demand still coming from refiners that process heavy crude is.
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