The news about deliveries of the US shale oil to Saudi Arabia is sure to puzzle even those who do not belong to the traders’ community. Nevertheless, citing the US Census Bureau, Reuters reported that the US shipped a small batch of oil to Saudi Arabia in June for the first time in nearly 20 years. At first glance, it looks like selling sand to the Sahara desert. Nevertheless, after some consideration, one can find out plausible reasons behind this move.
According to the US Census Bureau, the United States shipped about 550,000 barrels, or 18,300 barrels per day (bpd), of crude to Saudi Arabia in June 2020. Back in 2002, the US made a tiny trial delivery of 1,000 barrels to the Kingdom. In fact, the US had to comply with the ban on oil exports for four decades until the restrictions were lifted in 2015. Once the embargo is over, American energy companies have been flooding the global oil market with cheap oil. Why do they deliver to Saudi Arabia? First, a lot of countries import US shale oil to mix it with heavier crude grades. Second, being the allies, the US and Saudi Arabia might be testing a route for long-term prospects. However, most traders assume that the cargo could be a part of a different shipment heading to another consignee. Refinitiv Eikon, the vessel tracking data system, has not logged any records of a crude shipment to Saudi Arabia from the US.
Saudi Arabia is one of the key suppliers of crude oil to the US. The Kingdom exported to the US almost 1.2 million barrels per day in May, the largest volume over the recent three years.
