Saudi's Crude Oil Exports Drop To Lowest Level Since December -- July 21, 2015

Updates

July 21, 2015: from Bloomberg, oil guru who called 2014 slump sees a return to $100-crude --

Gary Ross, the founder of consultants PIRA Energy Group, said oil markets aren’t nearly as oversupplied as many believe and spare capacity is tight since Saudi Arabia is pumping all the crude it can without new drilling.

“Current prices are unsustainable,” he said Monday in an interview in London. “It’s hard not to see oil hitting $100 a barrel at some point in the next five years.”

If it takes longer than one year to get back to $75, and longer than two years to get back to $100 oil, the US oil and gas industry is going to look a lot differently in 2018 than it does now. The big change: the little fish will be eaten by bigger fish (yesterday it was announced that Rosetta Resources had been bought by Noble, for example), and the bigger fish will be eaten by the majors who will find off-shore drilling too expensive and too dangerous environmentally (think BP).

With Saudi Arabia transitioning to becoming one of the world's biggest refiner, $60 oil may, in fact, be tolerable for Saudi Arabia much longer than originally expected.

I don't think the average investor in the oil and gas industry (and, of course, no one else) has yet understood the tectonic change that is occurring with Saudi's transition. Saudi could easily become a net oil importer sooner than expected. They have a steady supply of oil (their own) but they can buy a lot of cheap oil on the open market to sell refined products at huge margins.
 

Original Post, July 21, 2015

 

There's an important story line in the article below. I will come back to it tomorrow if I remember, and if the spirit moves me. This is the link to the story. When you get to the story, note this incredibly interesting data point:

Saudi Arabia's crude oil exports fell in May to their lowest since December, with official data showing daily shipments stood at 6.935 million barrels a day (bpd) compared to 7.737 million bpd in April.

The decline came despite record high output of over 10 million bpd as the Kingdom—traditionally the world's biggest exporter of crude—transforms into one of the largest oil refining centers. 

I have several posts on this subject, including:

• the graph
• Saudi's new production record
• why I love to blog