Saudi Arabia is cutting its oil exports to the US for the express purpose of directing our use of our own oil to Saudi purposes—to make us use up our existing “excess” supplies.
Saudi Arabia is slashing its US oil exports to a near three-decade low for this time of the year, intensifying its efforts to reduce a global supply glut that has been pummeling crude prices.
Not just the global gut—our supply in particular. Saudi Arabian Oil Co is cutting its exports to the US to the lowest level since the late ’80s. Saudi Aramco is cutting its exports to us to the lowest level since 2009, the end-game of the Panic of 2008.
[S]ome analysts say these reductions in Saudi exports to the US could be a step toward ensuring that OPEC’s cuts have the intended effect of reducing bloated inventories of oil around the world, and particularly in the US.
This is a prickly ally; however, the embargo (which is what this amounts to, even if not intended and even if not complete) will have little deleterious effect on us, and it’s likely to backfire on the Saudis and their OPEC compatriots. The reduced sales, whether to us or to the world generally, only opens the world market to us: we’ll increase our market share, to the benefit of our economy. Furthermore, we can handle lower prices than can the OPEC members and their oil allies (vis., Russia and Iran), producing profitably at those lower prices; that encourages our continued production even as the Saudis and OPEC try to manipulate price with their doomed-to-fail attempt to manipulate supply.
And the American consumer, far from the more serious embargoes of the last century, will benefit from the largely unaffected supply and the lower prices of oil (and of natural gas, which aside from being inherently cheaper also is under price pressure to the extent that oil and gas are substitutes for each other), both directly and through the ripple of those lower prices throughout our economy.