In a move that apparently tallies with the unannounced decision to cut down on shipment of crude to shore up global oil prices, shipments of oil to the United States are being slashed by Saudi Arabia.

Representatives of the oil cartel Opec, along with a number of other oil producers decided to propose a reduction of oil production after its global price fell to below $70 from $84 in just about a month. Saudi Arabia, the largest oil producer in the world had also proposed a reduction in shipment of crude to increase demand and shore up prices.

This move by Saudi Arabia could antagonise US president Donald Trump who is intent on b ringing down crude prices for Americans and has accused Opec of artificially increasing prices on more than one occasion.

According to analysis by tanker-tracking firm ClipperData, fewer barrels of oil are being loaded on to ships by Saudi Arabia destined for the US starting this month. According to the estimates of ClipperData, Saudi exports of crude to the US could soon drop down to historic lows.

It is most likely that the crude inventory of the US would drop because of the lower number of barrels being shipped to the US by the kingdom. And hence inventories fall, there is inevitably an increase in prices. The same strategy was put to use by Saudi Arabia last year in its effort to increase oil prices by reducing the oversupply and inventory levels of crude with importers by cutting down on production along with Opec and a number of other oil producing countries outside of the oil cartel.

Experts say that this strategies adopted by Saudi Arabia clearly shows that its capacity to manage and organize the global oil market has strengthened. Weekly U.S. stockpile data was regularly closely monitored by traders to ascertain whether oversupply was going down to increasing during the 2014-2016 oil price crash. And Saudi Arabia has since learned that the US inventory data can be changed by it to increase prices and demand because it is the largest exporter of crude.

“It worked so well in 2017 for [the Saudis] to cut flows to the U.S. because people could see the inventories dropping because U.S. data is so timely and transparent,” said Matt Smith, head of commodities research at ClipperData.

“The markets have become more transparent through tanker tracking,” Smith said. “You can see those changes being implemented more, and [the Saudis are] aware of that.”

Following the most recent sharp drop in prices of crude globally, warning of a fresh round of production cuts to boost prices by Opec, Russia and some other oil producers, was issued by Saudi Energy Minister Khalid al Falih warned on Monday.

The plan was soon disapproved by Trump over twitter.

(Adapted from CNBC.com)

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