Preliminary data published by the U.S. Department of Energy show that shipments of Saudi Arabian crude to the United States fell to zero in July, the first time an entire month has passed without Saudi deliveries since 1985. The agency's figures, released Wednesday, indicate a complete halt in U.S.-bound Saudi crude last month.
The stoppage is tied to disruptions in Persian Gulf flows associated with the U.S.-Iran conflict, which have largely curtailed crude exports originating from the region. Earlier in the year U.S. refiners were taking in more than 800,000 barrels per day of Saudi oil, a sharp contrast with July's absence of shipments.
With Persian Gulf barrels constrained - including effects tied to the closure of the Strait of Hormuz and other war-related disruptions - U.S. refiners have sought alternative supplies. The constriction has pushed up prices for crude that track the global benchmark, prompting refiners to alter feedstock mixes to maintain runs.
Phillips 66 said it has reduced the portion of Middle Eastern crude processed at its plants to below 1 percent. Chief Executive Officer Mark Lashier noted that the company has been routing light domestic crude to its New Jersey refinery to stand in for some foreign grades.
Other U.S. refiners with historical reliance on Saudi barrels include Chevron Corp. and PBF Energy Inc. Motiva Enterprises LLC - owner of the nation's largest refinery in Port Arthur, Texas - remains wholly owned by the Saudi state oil company and typically refines Middle Eastern grades.
The shift away from Saudi oil has benefited other suppliers. U.S. imports of Venezuelan crude rose to about 600,000 barrels in July, compared with roughly 100,000 barrels at the start of the year, according to the data cited in the agency release.
While there have been isolated weeks in prior periods when Saudi deliveries to the U.S. dropped to zero, July marks the first complete month at that level in more than four decades. Analysts at Kpler forecast that U.S. imports of Saudi crude will recover to around 300,000 barrels per day in the current month, bringing shipments closer to recent historic norms.
Key points
- U.S. Department of Energy data show zero imports of Saudi crude in July - first full month without Saudi barrels since 1985.
- Refiners have reduced Middle East crude intake and increased domestic and Venezuelan supplies; Phillips 66 cut Middle Eastern share to under 1 percent.
- Analysts expect Saudi imports to rebound to roughly 300,000 barrels per day in the current month, per Kpler data.
Risks and uncertainties
- Continued disruptions in Persian Gulf crude flows related to the U.S.-Iran conflict could further constrain Middle Eastern supplies and keep pressure on global benchmark-linked prices - affecting refiners and fuel markets.
- Reliance on alternative sources, such as increased Venezuelan crude and domestic light grades, poses supply-mix and logistics challenges for refiners accustomed to Middle Eastern heavy and sour grades.