As Saudi prince visits U.S., shale transforms oil relationship
Pubdate：2018-03-20 11:18
Source：liyanping
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LONDON (Bloomberg) -- From Franklin Roosevelt to George W. Bush, American presidents saw oil as the cornerstone of the relationship between Saudi Arabia and the U.S. -- a steady supply from the Middle East’s largest exporter was considered crucial to the economy’s well-being.
As Saudi Crown Prince Mohammed bin Salman travels to America this week, the Texas-to-North Dakota shale boom has transformed the equation. While strong relations are considered crucial to the national security of both countries, energy will probably be lower down the agenda when the prince visits President Donald Trump’s White House
In October, the U.S. imported just 563,000 bpd of Saudi crude, the smallest amount since June 1986 and down 75% from a peak of 2.24 MMbpd in 2003.
The dramatic drop in U.S. net oil import needs will "have profound implications on energy geopolitics," said Fatih Birol, head of the International Energy Agency.
"The U.S. secretary of state today, in international discussions, must be sitting in his negotiation chair more comfortably compared to his predecessors representing a country becoming an energy exporter," Birol said in an interview earlier this year.
Saudi Arabia only started to cut shipments into the U.S. in the second half of last year, so the annual average didn’t reflect fully the drop. On average, the U.S. bought 943,000 bpd in 2017, the lowest since 1988.
The drop was part of a wider campaign by the Organization of Petroleum Exporting Countries to fight a global glut that has weighed on oil prices. Saudi Arabia has been targeting the U.S. because investors pay more attention to American inventories than anywhere else.
"The U.S., still holding ample stocks and seeing impressive growth in domestic production, seems an obvious choice for Saudi cutbacks," the IEA said earlier this month. "Indeed, over the past year, shipments nearly halved.”
The freedom from Saudi oil that’s been a rhetorical aspiration for generations of American politicians is within reach.
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