Saudi Arabia wields less power on world energy markets as cuts in oil drilling help rival producers like Iran, Russia and the U.S.
The country’s crude exports to the U.S. for the week ended March 10 fell by 426,000 barrels a day from the previous week, the sharpest weekly drop since November, according to data cited by The Wall Street Journal. The Organization of the Petroleum Exporting Countries last fall decided to cut output as a way of supporting oil prices after a significant collapse.
Saudi Arabia is seeking growth in Asia, where China is one of the world’s fastest-growing consumers of oil. Russia is the dominant supplier to China, import data show.
“The Saudi retreat from an all-out battle for these markets reflects the compromises the kingdom is now making to achieve a higher oil price, as it faces fiscal pressures from a burgeoning population and as the planned offering of its state oil company, Saudi Arabian Oil Co., or Saudi Aramco, nears,” the WSJ reports.
The kingdom, which is able to produce oil cheaply compared with other countries, for years had prioritized its market share. As recently as 2014, Saudi Arabia kept pumping oil even as its price started to plunge.
The country’s strategy has shifted as U.S. competitors have revived oil fields with the use of fracking technology that extracts gas and crude from shale formations. America is now an exporter of energy products, selling over 1 million barrels a day to foreign customers.
“Since Saudi Arabia and OPEC decided to cut production last November, American shale companies have taken advantage of the resulting higher prices to launch a comeback, adding 412,000 barrels a day of new output,” the WSJ reports, citing data from the U.S. Energy Information Administration.
Meanwhile, Saudi Arabia has cut production by nearly 800,000 barrels a day since October, showing how important stable prices are to the country’s economy.
“The cuts in exports to the U.S. are the latest in a long series of pullbacks in what was once the kingdom’s most lucrative market,” according to the WSJ. “In the 1990s, Saudi Arabia accounted for almost a third of all American crude imports, but it represented only 12 percent in November, according to the EIA.”
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