Dan Murtaugh and Lynn Doan of Bloomberg report that after years of keeping the price of crude sold to the U.S. low enough to maintain market share, the Kingdom “is losing ground as the shale boom leaves U.S. refiners with ample supplies of inexpensive domestic oil.”
Oil imports to the United States have fallen as domestic production has soared 65% in the U.S.
Bloomberg quotes Mike Wittner, Societe Generale (GLE)’s head of oil market research:
“The Saudis are not going to sell crude at a disadvantage to themselves -- they’re not about buying market share anymore...Those days are long gone. They’ll price crude to be competitive with the competing sour grades in every market, and if that means their flows to the U.S. are down, so be it.”
The article notes that eventually, Saudi Arabia will be forced to pivot away from U.S. markets – selling only what is demanded here and selling at a premium to Asian markets:
“In some ways, it’s inevitable that Saudi Arabia realizes there are more attractive markets, and they’ll rotate away, supply their U.S. refineries with domestic grades and sell their crude at a premium to Asia,” Francisco Blanch, head of commodities research at Bank of America Corp. in New York, said by phone Aug. 29.
