How many nuclear bombs does Saudi Arabia have! It has been news for several months that the oil market in the world is going to become more volatile. In the meantime, Saudi Arabia has reduced crude oil shipments to the United States since July. The country has reduced crude oil production by 1 million barrels per day since July 3. This withdrawal has been extended until August. As Asia is the country’s main buyer of crude oil, such a plan would reduce oil supplies to the US and Europe. Saudi Arabia has attempted to short-circuit the oil market in several incidents over the past few years. This step is part of that. However, Saudi Arabia has not done such a thing in China and India.
Both Saudi Arabia and Russia cut crude output by 1.5 million barrels
It has been reported that Saudi Arabia’s commercial and strategic oil reserves have been running in these two countries for the past one and a half years. In early June, OPEC plus countries decided to stay within their previous oil production limits until the end of 2024. But Saudi Arabia, OPEC’s top producer, will voluntarily cut crude output by 1 million barrels per day to about 9 million barrels per day starting in August.
Immediately after this incident, Russia also made a statement saying that they will also reduce the extraction of fuel oil by another 5 million barrels per day. After 2011, Saudi Arabia reduced its oil production to such a low level. Earlier, however, this limit was brought down in 2020 after the Covid pandemic. The country did the same during the 2019 attack on the Aramco facility.
Motiva is controlled by Aramco
Saudi Arabia has announced a reduction in oil production. But Aramco, the country’s largest crude exporter, has assured at least five North Asian oil refineries that they will receive and continue to receive the crude oil they requested in July. Clearly, Saudi Arabia is prioritizing the supply of oil to the Asian market. But Aramco could cut U.S. oil shipments, forcing the oil market to shrink.
Aramco controls Motiva, the largest oil refinery in the US by capacity. Saudi Arabia’s decision may affect the supply of 630,000 barrels per day to Australia’s Port Arthur. OPEC Plus countries produce about forty percent of the world’s crude oil. Policy decisions taken by countries in this alliance can have a major impact on oil prices around the world. The alliance has already cut oil production by 2 billion barrels a day. How many years have countries agreed on this decision?
Why is Saudi Arabia doing this with the United States?
The country sought some kind of permission from the US to start a peaceful nuclear program. But the United States does not want to give such permission to Saudi Arabia. US ally Israel also stands against this desire of Saudi Arabia. On the contrary, the country is now pressuring Saudi Arabia to be friends with Israel. Such bargains have created this situation. And does Saudi Arabia want to realize their demands by using oil? We have to wait for some more time to know about these things. Friends, if you want to know about US power in oil trade, follow our next post. Thanks.