Saudi Arabia restricts the supply of oil to the United States

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U.S. crude imports from Saudi Arabia averaged less than 900,000 bpd in the four weeks ending on July 7, according to the U.S. Energy Information Administration.

According to a Saudi industry source familiar with oil policy of the Kingdom, imports from Saudi Arabia will fall even further to less than 800,000 bpd in August.

Saudi Arabia is cutting exports to all destinations but reducing shipments to the U. S. is especially important because U.S. stocks are the most visible and have the biggest impact on prices.

Saudi Arabia is reducing exports in all directions, but the reduction of supply in the U. S. is especially important because stocks in the U. S. the most visible and have the greatest impact on prices.

The U. S. accounts for more than 40 percent of the commercial crude and product stocks held in the OECD and its stocks are reported weekly rather than monthly as in most other countries.

So, U.S. crude and product stocks receive disproportionate attention from oil traders and analysts, and can have a serious impact on global oil prices.

By limiting supplies, Saudi Arabia hopes to reduce inventory in the U. S. and to demonstrate to skeptical traders that the long-awaited rebalancing of the world market is finally continuing.

It seems that the strategy has had some early success when crude oil inventories in the U.S. dropped earlier and faster than usual in the second and third quarters of 2017.