Prior to implementation of OPECs November agreement to cut oil production, both Saudi Arabia and Iraq were producing high volumes, which boosted exports.
Crude oil imported to the United States from Saudi Arabia and Iraq combined has reached a peak not seen since 2012, but the U.S. Energy Information Administration says the volume will likely decline soon.
Toward the end of 2016, high production in Saudi Arabia and Iraq, coupled with low domestic demand in Saudi, contributed to the crude export volumes. Saudi exported 8.3 million barrels per day (Mmbpd) in November – its highest volume since May 2003 – before dropping to 8 Mmbpd in December, EIA said in a recent brief. Iraq’s exports hit a record high of almost 4.1 Mmbpd in November, which continued through December.
Both countries’ production was relatively high prior to OPEC’s pledge in November to cut production. Saudi Arabia produced 321,000 bpd and Iraq volumes increased by 700,000 bpd, above the previous year’s levels, according to information from the Joint Organizations Data Initiative. In 2015, Iraq’s production was impaired by economic sanctions.
But with the implementation of the OPEC production cut pledge in January, coupled with U.S. refiners’ ability to use domestic Mars crude oil as feedstock, the export totals may decline, EIA said.
In the United States, Congress is considering a tax on imported goods and services, which could also cut imports from the Middle East. The border adjustment tax (BAT) could boost income for domestic oil and gas producers, but refiners’ are wary of its impact on the heavy crude imports they use for feedstock.
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