Recently, media reported that Saudi Arabia is boosting crude oil exports to the U.S.
Members of the Organization of Petroleum Exporting Countries have been increasing crude oil production following the western sanction against Iran. Their outputs have rebounded to the pre-Lehman shock level.
Especially, Saudi Arabia that has the largest spare production capacity lifts its crude oil production significantly. OPEC evaluates the Kingdom's February output at 9.66 million barrels per day, meanwhile International Energy Agency estimates that Saudi production has already reached to the 10 million bpd level.
Japan and China has reduced Iranian crude oil import since the beginning of this year, while France and U.K. has stopped buying Iranian oil. These nations have increased purchase from Saudi Arabia.
But media reported U.S. also had boosted Saudi crude oil imports by 38% from a year ago in the first 10 weeks of 2012. The kingdom's crude oil shipments to U.S. was reported rising about 25%.
Import of Saudi crude oil by U.S. seems to have recovered 1.5 million bpd, the same level as the pre-Lehman shock. U.S. imported 1.3 million bpd of Saudi crude oil in December 2011.
However, the U.S. has not imported Iranian crude oil for a long time. Thus American refineries should not require any alternative crude oil to Iran.
On the other hand, petroleum consumption in the U.S. is declining despite recent indicators suggesting economic recovery.
Why U.S. needs to boost Saudi oil import?
Crude oil import statistics over the past three months show that total U.S. imports surged in February. Import from Canada, that had increased significantly after the Keystone pipeline started business operations in February 2011, was capped in 2012.
Imported crude oil carried by tankers seems to be transported into Midwest through pipelines.
Iranian crude oil outputs are expected to be falling in March but are still avoiding large amount of reduction. It means other OPEC members' extra production may cause excess supply in the global market.
Saudi Arabia has decided to increase production levels further in July when EU's import ban against Iran is scheduled to be effected, because of request by the Obama administration.
U.S. is responsible to over-supply which may happen. Is that the reason why U.S. lifts Saudi crude oil import with cutting Canadian oil purchase despite sluggish domestic demand?
These imports may be suitable for supplement to the strategic petroleum reserve that was reduced by 30 million barrels last year for urgent release. But absorbing commercial stocks is likely to stimulate the crude oil market and that is not desirable for recent rising gasoline prices.