Threat of U.S. Cutting Oil Imports Shrugged Off by OPEC

Claiming that the world’s biggest economy would continue to need crude from abroad, OPEC’s two biggest suppliers to the U.S. shrugged off a vow by President Donald Trump to end dependence on the group’s oil.

While the Venezuelan Energy and Industry Minister, Nelson Martinez said he expects his country’s crude exports to the world’s top consumer to remain stable, his Saudi Arabian counterpart said that the U.S. is “closely integrated in the global energy market.”

At a meeting of producing countries in Vienna, Al-Falih said: “the positions that the U.S. and Saudi Arabia take in global energy are very important for global economic stability.” Saudi Arabia was looking forward to working with the Trump administration, he added.

According to a plan posted on the White House website, by exploiting “vast untapped domestic energy reserves”, Trump said, just after his inauguration on Friday, that he was “committed to achieving energy independence from the OPEC cartel and any nations hostile to our interests.”

According to data compiled by Bloomberg, with Saudi Arabia and Venezuela accounting for 1.81 million, the U.S. imported about 3 million barrels a day from the organization last year.

Calls for the U.S. to end its reliance on supplies from the Organization of Petroleum Exporting Countries have been given by U.S. Presidents on earlier occasions too. When he said in 2006 the nation was “addicted to oil”, former Bottom of Form

President George W. Bush promised to cut imports from the Middle East. But during Bush’s time in office, shipments from OPEC rose 10 percent. Pledges to reduce the country’s reliance on foreign oil had been given by every U.S. president going back to Richard Nixon.

Concerns that his country’s shipments to the U.S. might dwindle under a Trump administration were downplayed by Venezuela’s Martinez.  “The export volumes will be maintained,” he said. “There is a lot of interdependence in the world of energy. It’s good to maintain it for everyone’s good.”

While Venezuela shipped about 733,000 barrels a day and Iraq some 400,000 barrels a day of crude to the U.S. in 2016, Saudi Arabia exported an average of 1.08 million barrels a day.

Mohammad Barkindo, the group’s secretary-general, said in the Austrian capital that OPEC is waiting for a new U.S. energy secretary to take office to learn more about Trump’s energy policies.

According to Algeria, another member of the group, the price increase following OPEC’s December agreement with other producers to reduce oil output is benefitting the U.S.

“OPEC is currently helping the U.S.,” Noureddine Boutarfa said Saturday in an interview in Vienna. “The price recovery is helping U.S. companies, the U.S. industry, the U.S. economy.”

After several OPEC and non-members agreed to end two years of unlimited production and instead cut output, crude prices rose to an 18-month high of more than $58 a barrel. But as traders await proof that the producers will follow through, prices have since slipped about 5 percent from that peak.

The new U.S. administration said it would “work with our Gulf allies to develop a positive energy relationship as part of our anti-terrorism strategy” even as Trump commits to ending U.S. reliance on OPEC’s oil.

(Adapted from Bloomberg)

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Categories: Economy & Finance, Geopolitics, Strategy, Sustainability

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