Saudi Arabia reduces oil supply to the US to raise the price

Data from weekly U.S. oil inventories show that Riyadh has decided to downsize from the heights reached in May and June, when the pandemic and increased production fueled its rapid growth. In the five weeks between March 20 and April 24, inventories increased at a rate of 2.1 million barrels a day, recalls the analyst Julian Lee in his article for Bloomberg.

The excesses in warehouses lower oil prices, and US reserves are the most visible in the world. The Energy Information Administration of the Department of Energy reports the levels weekly.

The OPEC + countries, where they appear Russia and Mexico, agreed to lower their production by 1.66 million barrels a day from the beginning of 2017. They hoped to reduce the oil accumulated as a result of the first US shale boom, Lee said. Washington’s poor implementation of the cuts and increased oil production led to inventories continuing to grow.

In the second half of 2017, the strategy worked and oil prices rose a 51% from a low of $ 44.82 in mid-June to $ 67.87 at the end of the year, the expert highlights.

Now, Riyadh is trying to repeat the success. While in May and June its oil reached the North American country almost daily, sometimes more than one a day, in July and August, the number reached just over one a week.

The figure could fall further in the coming weeks, as there are only six tankers carrying nine million barrels of Saudi crude with a US port as their destination, according to oil tanker tracking data monitored by Bloomberg.

In all probability, the Arab country will maintain this trend, says Julian Lee. It has made significant price cuts for September in Europe, where it competes with Russia, and has also lowered prices a bit for buyers in Asia. However, prices for the US remain unchanged since July.

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