Oil World Turns Upside Down as US Sells Oil in Middle East
(Bloomberg) -- The United Arab Emirates, a model Persian Gulf petro-state where endless billions from crude exports feed a giant sovereign wealth fund, isn’t the most obvious customer for Texan oil.
Yet, in a trade that illustrates how the rise of the American shale industry is upending energy markets across the globe, the U.A.E. bought oil directly from the U.S. in December, according to data from the federal government. A tanker sailed from Houston and arrived in the Persian Gulf last month.
The cargo of American condensate, a type of very light crude oil, was preferred to regional grades because its superior quality made more suitable for the U.A.E’s processing plants, a person with knowledge of the matter said, asking not to be identified discussing a commercially sensitive matter.
“As a member of OPEC and a large crude producer, I would imagine they would be very self-sufficient in their own crude supply,” said Andy Lipow, president of Lipow Oil Associates LLC. The purchases of U.S. oil aren’t likely to continue, given the U.A.E.’s own supply, Lipow said.
The end of a ban on U.S. exports in 2015 coupled with the explosive growth of shale production, has changed the flow of petroleum around the world. Shipments from U.S. ports have increased from a little more than 100,000 barrels a day in 2013 to 1.53 million in November, traveling as far as China and the U.K.
The U.S. exported about 700,000 barrels of light domestic crude in December to the U.A.E., the Census Bureau reported Tuesday. While Energy Information Administration data show it’s the fourth-largest OPEC producer’s first cargo of U.S. oil, Adnoc said in July it purchased condensate from the U.S. for September delivery. Although it exports more than two million barrels a day, the Middle Eastern country typically imports extra-light condensate to process in a unit known as a splitter.
With rising crude exports and already booming overseas sales of refined petroleum products such as gasoline, the U.S. net oil imports have plunged to below 3 million barrels a day, the lowest since data available starting 45 years ago, compared with more than 12 million barrels a day in 2006. The U.S. could become a net petroleum exporter by 2029, the EIA said this week.
U.A.E. crude production was 2.85 million barrels a day in January, according to data compiled by Bloomberg. Output has declined from 3.07 million at the end of 2016 as OPEC and allies cut production to reduce a global glut and prop up prices.
The cargo was shipped from Enterprise Products Partners LP’s Houston terminal on the tanker Seoul Spirit, which arrived Jan. 31 at the Port of Ruwais in Abu Dhabi, according to ship tracking data compiled by Bloomberg.
Until last year, the U.A.E. relied on Qatar for its condensate supply. But the two countries are embroiled in a political dispute, and the U.A.E. decided in June to ban all petroleum ships from Qatar.
With assistance from Anthony DiPaola and Javier Blas. To contact the reporters on this story: Sheela Tobben in New York at firstname.lastname@example.org; Wael Mahdi in Kuwait at email@example.com. To contact the editors responsible for this story: David Marino at firstname.lastname@example.org; Nayla Razzouk at email@example.com Claudia Carpenter.
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